68.
bank noTes
QCb AGAiNSt DiFFereNtiAL iNtereSt rAte Qatar Central Bank (QCB) has announced the need to guard against a large interest rate differential with other economies, which could prompt heavy capital inflows. It has also identified the need to ensure sustained bank lending to support growth of the Gulf Arab economy. “A large interest rate differential between Qatar and advanced economies may lead to heavy inflows of capital while challenging liquidity management and financial stability,”
miDDLe eASt SeeS GroWth iN PrivAte eQUity
the Bank said. “However it has been possible to meet these challenges by adopting a flexible approach in conducting monetary policy and complementing it with measures that strengthened financial stability.” Qatar cut its overnight deposit rate to 1.5% in August to support the non-oil economy and curb capital inflow, while it spent about 6.5% of GDP last year on capital injections and other measures to maintain stability in the sector.
QFCA ANNoUNCeS NeW tAx reGime FormALiSAtioN Qatar Financial Centre Authority (QFCA) announced that companies registered with QFC will have to pay 10% corporation tax on locally sourced profits as part of its new tax regime which will be effective retroactively from January 1, 2010. With this, the tax-free period of 121 licensees has officially ended. Features inclusive of the new regime are, it will be administered through self-assessment and advance transaction ruling scheme; tax incentives for reinsurance, captive insurance and asset management profits and zero personal income tax and new regulations ensuring QFC’s inclusion in Qatar tax treaties negotiated
In Numbers Global tax rates
with other countries. “The introduction of these tax regulations is integral to the QFC's long term strategy and this low rate has been introduced to encourage further investment in Qatar, particularly in QFC,” said Ian Anderson, Chief Finance Officer and Director of Tax, QFCA., “A tax rate of 10% is a competitive tax rate compared to the UK which has 28% tax. The tax regime is developed over the last three years in close consultation with the Ministry of Economy and Finance and being implemented with the cooperation of the financial services industry.”
28%
10%
Qatar
29.8%
A research by Booz & Company shows a remarkable growth in private equity (PE) in the Middle East. From 2004 to 2008 alone, global PE growth in the Middle East reached 70%. According to the research, the regionÕ s PE industry picked up when equity prices were rising, and many local players enjoyed early success through quick and profitable exits from investment positions. However in the last few years, there have been more problems than profits in region’s PE. For regional firms to grow, they will need to identify sustainable investment ideas.
“The tax returns and payments submitted by the companies will be “audited by the QFCA” and due “a reasonable six months after the end of each accounting period,” he said. Meanwhile, QFCA’s acting CEO Shashank Srivastava while hailing the enactment, said, “It is important to have a viable tax regime that ensures a sustainable economy."
35%
UK
Germany
briDGiNG bArrierS throUGh iCt
30%
US
25%
China
Australia
33.3%
India
(unofficial estimates of corporation taxes on locally sourced profits) 20
QT-Nov.indd 20
Qatar Today November 10
11/1/10 7:25:36 PM