Cabinet Decision No. 39 of 2019, Article 10, regulates interest deductions on loans from related parties. It introduces a thin capitalization rule, limiting deductible interest to loans not exceeding three times the company's equity. The loan must contribute to the taxpayer's economic benefit and be supported by a formal agreement. Crucially, interest paid by a sole proprietorship to its owner is strictly non-deductible. These measures are designed to prevent tax base erosion through excessive interest payments to associated entities or internal owners within the State of Qatar.
Document Type: ERS - Executive Regulations Law: Income Tax Law 24 of 2018 Decision Number: executive-regulations-39-article-10 Year: 2019 Country: 🇶🇦 Qatar Official Name: Article 10
Last updated at: 2026-02-23 12:13:40 UTC
Interest on loans and similar payments paid by the taxpayer to related parties, as defined by international accounting standards, are deductible up to the interest calculated on loans not exceeding three times the equity recorded in the accounting during the relevant accounting period, provided that the loan contributes to economic benefits for the taxpayer. This must be based on an agreement specifying the loan term and its purpose.