GTL Summary:

Cabinet Decision No. 39 of 2019, under Article 1, defines the scope of a 'permanent establishment' within Qatar. It specifically identifies offices, factories, workshops, and natural resource extraction sites. The article also covers building sites lasting over six months and consultancy services exceeding 183 days. It clarifies exclusions for preparatory or auxiliary activities and details conditions for 'closely related' enterprises. Furthermore, it establishes criteria for independent agents and insurance enterprises, ensuring a comprehensive framework for determining tax liability for non-resident entities operating in the State of Qatar.

Document Type: ERS - Executive Regulations
Law: Income Tax Law 24 of 2018
Decision Number: executive-regulations-39-article-1
Year: 2019
Country: 🇶🇦 Qatar
Official Name: Article 1
Last updated at: 2026-02-23 12:13:40 UTC

SECTION 1 - SCOPE OF TAX

Chapter 1 - Tax Liability

Article 1
[1]

  1. [For the purposes of applying Article 1 of the Law, the term "permanent establishment" particularly includes the following:

    1. Office

    2. Factory

    3. Workshop

    4. Sales outlet

    5. Warehouse, concerning a person providing storage facilities for others,

    6. Mine, oil or gas well, quarry, or any other place for the exploration, extraction, and exploitation of natural resources

  2. The term "permanent establishment" also includes:

    1. A building site, construction, assembly, or installation project, or related supervisory activities, provided that this site, project, or activities last for more than six months.

    2. The provision of services, including consultancy services, by an enterprise through employees or other personnel engaged for this purpose, provided that such activities continue within the state for a period or periods totaling more than 183 days within twelve months starting or ending in the concerned fiscal year.

  3. The term "permanent establishment" does not include:

    1. The use of facilities solely for the purpose of storage or display of goods or merchandise owned by the enterprise.

    2. The maintenance of a stock of goods or merchandise owned by the enterprise solely for storage, display, or processing by another enterprise.

    3. The maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or collecting information for the enterprise, or for carrying out any other activity of the enterprise.

    4. The maintenance of a fixed place of business solely for any combination of activities mentioned in the preceding sub-clauses of this clause, provided that the overall activity of the fixed place of business is of a preparatory or auxiliary nature.

  4. The provisions of clause (3) of this Article shall not apply to a fixed place of business used or maintained by an enterprise if the enterprise itself or a closely related enterprise conducts business at the same place or at another location in the state.

    Neither that place nor the other location shall be considered a permanent establishment of the enterprise or the closely related enterprise in accordance with this Article. Additionally, the overall activity resulting from the combination of activities conducted by the two enterprises at the same place, or conducted by the same enterprise or the closely related enterprise at both places, shall not have a preparatory or auxiliary nature.

    It is stipulated that the commercial activities conducted by the two enterprises at the same place, or conducted by the same enterprise or closely related enterprises at both places, must constitute complementary functions as part of a coherent business operation.

  5. Notwithstanding the provisions of clause (2) and subject to the provisions of clause (6) of this Article, if a person is acting in the state on behalf of an enterprise, that enterprise shall be considered to have a permanent establishment in the state regarding any activities that person undertakes for the enterprise if that person:

    1. Habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise, whether these contracts are:

      In the name of the enterprise:

      For the transfer of ownership of, or for granting the right to use, property owned by the enterprise or that the enterprise has the right to use

      For the provision of services by the enterprise, unless the activities of that person are limited to those mentioned in clause (3), which, if carried out through a fixed place of business, would not make this place a permanent establishment under the provisions of that clause.

    2. Habitually maintains in the state a stock of goods or merchandise from which the person regularly delivers goods or merchandise on behalf of the enterprise.

  6. Notwithstanding the preceding provisions and subject to the provisions of clause (7) of this Article, an insurance enterprise, other than a reinsurance enterprise, shall be considered to have a permanent establishment in the state if it collects premiums in the state or insures risks located therein through a person.

  7. Clauses (5) and (6) of this Article do not apply if the person acting in the state on behalf of an enterprise is an independent agent and acts for the enterprise in the ordinary course of that agent's business.

    However, if a person acts exclusively or almost exclusively on behalf of one or more enterprises to which it is closely related, that person shall not be considered an independent agent for those enterprises under the provisions of this clause.

  8. If a resident company in the state controls or is controlled by a company residing in a foreign country or conducts business in that foreign country (whether through a permanent establishment or otherwise), this alone does not make either company a permanent establishment of the other.

  9. For the purposes of this Article, a person or enterprise is closely related to an enterprise if one has control over the other, or both are under the control of the same persons or enterprises. In all cases, a person or enterprise is considered closely related to an enterprise if:

    1. One directly or indirectly owns more than 50% of the beneficial interest in the other (or in the case of a company, more than 50% of the total voting power and value of the company's shares or the beneficial interest in the company),

    2. Another person or enterprise directly or indirectly owns more than 50% of the beneficial interest (or in the case of a company, more than 50% of the total voting power and value of the company's shares or the beneficial interest in the company) in the person or enterprise or in both enterprises.][G1]

Footnotes

[1]Amended by Cabinet Decision No. 3 of 2023

GTL Notes

[G1]This Article was amended, vide Amending Law No. 11 of 2022 and and Cabinet Resolution No. 3 of 2023. Prior to its amendment, it read as follows:
"For the purposes of Articles 2, 3 of the Law, income derived from sources in the State shall particularly include:
1. Gross income derived by a resident Taxpayer from an activity carried out in the State.
2. Capital gains derived from the disposal of real estate properties located in the State or the disposal of shares, ownership shares and any such other tangible or intangible assets with respect to an activity carried out in the State.
3. Income derived by a Permanent Establishment (PE) from an activity carried out in the State. ‘Permanent establishment’ means the following:
a. A building site, construction, assemblyproject or supervisory activities in connection therewith constitute a PE only if such site, project or activity lasts more than six months.
b. Provision of services including the consultancy services provided through employees or other personnel engaged by the enterprise for such purpose, but only if the activities of that nature continue for a period or periods aggregating more than 183 days in a twelve months period.
4. Income derived by a non-resident person from any activity carried out in the State, where such activities are similar or quite similar to an activity carried out by a permanent establishment in the State and linked to the said non-resident person, irrespective of whether such activity was restricted to only one transaction.
5. Income derived by a non-resident person with no Permanent Establishment in the State, where such person carries on an activity in the State through a resident person acting on his behalf, in the following cases:
a. If the resident person concludes contracts orplays the principal role in concluding these contracts on behalf of the non-resident person, in a routine manner and without any major amendment therein, irrespective of these contracts being related to the transfer of asset ownership, grant of asset use rights, or provision of services by the non-resident person.
b. If the resident person maintains in the State, in a routine manner, inventories of merchandise and goods and is taking charge of it on behalf of the non-resident person.
6. Income derived by a non-resident person with no Permanent Establishment in the State and without having no resident person acting on his behalf, in the following cases:
a. If the activity is carried out in the form of an operation(s) constituting a complete business cycle in the State. ‘Complete business cycle’ refers to a series of commercial, industrial or handicraft operations resulting in an income or gain, where such operations form a coherent whole, such as acquisition processes followed by sale processes.
b. If the activity involves the provision of services inside the State. Such services shall be deemed to be provided inside the State if they have been completed, consumed, used, or exploited in the State."

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