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Qatar: Withholding tax compliance, electronic filing requirements

Qatar: Withholding tax compliance, electronic filing

The Ministry of Finance issued Circular No. 3/2018 (14 October 2018) that reiterates and serves as a reminder of the withholding tax requirements in Qatar under provisions of the income tax law and pursuant to prior guidance.

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In general, the new circular focuses on the following points:  

  • Payments made to taxpayers that are registered with the commercial registrar or not registered in Qatar for an activity with a period less than one year are subject to withholding tax.
  • Taxpayers are required to submit a withholding tax statement (Form 2-1) along with proof of payment to the Qatar Tax Department before the 16th day of the first month following the month in which the payment is made.
  • Failure to withhold tax is subject to a penalty in an amount equal to (1) the amount of tax that was not withheld, plus (2) the amount of tax owed.

Online filing of withholding tax statement required

The Qatar Tax Department, after the issuance of the October 2018 circular, announced taxpayers and audit firms must file withholding tax statements online (electronically) beginning 1 November 2018. Manual submission of a withholding tax statement will only be accepted if it is submitted online through the tax authority’s portal as well.

KPMG observation

Circular No. 3/2018 reiterates and emphasizes the withholding tax compliance requirements. No new additional compliance requirements are provided. However, the circular reflects the increased focus of the tax authorities on the withholding tax rules. Taxpayers need to consider reviewing their “historic payments” from a withholding tax perspective and, if needed, file missing withholding tax statements to avoid adverse consequences. 

Concerning the rules requiring online filing of withholding tax statements, taxpayers may encounter certain challenges if data fields need to be uploaded on the Qatar Tax Department’s portal.

 

Read an October 2018 report [PDF 82 KB] prepared by the KPMG member firm in Qatar

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