How to do business in Qatar (page 1 of 2)

After a decade spent languishing in the shadow of Dubai and Bahrain, Qatar's business community is emerging into what many observers predict will be a golden age.

Much of this is down to the Qatari government and its regulatory bodies, which have tightened legislation and insisted upon international best practice standards across a wide range of sectors. Added to that is international confidence in the long-term profitability of investment in Qatar: huge hydrocarbon revenues will ensure significant government spending, which will in turn filter into the pockets of the private sector.

There are currently three main options for foreign companies that wish to establish a presence in Qatar without operating from a free-trade zone: a Local Joint Venture Company, a Branch of a Foreign Company, and a Commercial Agency.

Local Joint Venture Company guidelines

With a Local Joint Venture Company, the unit must be majority-owned by a Qatari partner. With a minimum 51% stake, that partner will in theory control the company and take 51% of any profits, although in practice this is not always necessarily the case.

While some Qatari partners may be hands-on and look to play an active role in the direction and running of the venture, others are hands-off and rely more on their influence in the local business community, to add value to the company. A ministerial exemption to the 49% limit on foreign ownership may be granted in the case of investment in certain areas including agriculture, manufacturing, health, education, tourism, development of natural resources, mining and utilities.

Branch of a Foreign Company guidelines

In order to open a Branch of a Foreign Company, a foreign firm which is making a significant investment in Qatar may appeal to establish a business entity by ministerial decree; this is common practice with foreign firms working on the development of public services or utilities. The company must first be authorised by the Ministry of Economy and Commerce, and the company will usually operate only for the duration of a specific project or venture, before it is wound up.

Guidelines for establishing a Commercial Agency

Finally, foreign firms may approach Qatari companies with the aim of establishing a Commercial Agency, under which a local firm is appointed as an agent to market goods and services within the state of Qatar.

The foreign company does not therefore establish a direct presence in Qatar; this has become common practice in the retail industry across the wider GCC, not just in Qatar. Agents operate under the regulations of the Qatar Agency Law, while the establishment of companies is controlled by the Qatar Commercial Companies Law.

GCC citizen investment law exemptions

Citizens of the other five GGC countries - Bahrain, Kuwait, Qatar, Saudi Arabia and the UAE - are exempt from the application of Qatar's foreign investment laws, and as such may take up to a 50% stake in a company (the other 50% must still be held by a Qatari), as well as own freehold land in three designated zones within Qatar.

Qatar Free Trade Zones

Foreign companies may also establish their operations through a free-trade zone, a practice that has proved popular across the GCC region, and helped to bolster the big-name credentials of markets such as Dubai and Bahrain.