By: Omar Qouteshat – Senior Associate
Shadw Ibrahim – Associate
Aciel Kafu – Associate
As part of the development of the legislative framework governing economic activities in the State of Qatar, particularly in the field of taxation, the Council of Ministers Resolution No. 3 of 2026 Concerning the Tax Incentive Related to Capital Gains Arising from Corporate Restructuring (“Resolution”) was issued with the aim of achieving greater tax neutrality in asset transfers carried out in the context of corporate restructuring.
Companies undertake restructuring for various reasons, most notably to enhance operational efficiency, prepare for mergers and acquisitions, or pursue listings on financial markets. Such transactions often do not result in any genuine economic gain, as the assets or activities remain within the same entity or economic group. The Resolution changes this, establishing the principle of tax neutrality for certain asset transfers undertaken as part of corporate restructuring, provided that the prescribed conditions and requirements are satisfied.
Article 1 of the Resolution applies the capital gains tax incentive to certain transfers or exchanges of assets carried out as part of corporate restructuring. It provides that capital gains or losses are disregarded for legal persons, while capital gains realised by resident natural persons are exempt, provided that such transactions take place between parent and subsidiary companies or between companies within the same group.
The Resolution limits the application of such treatment to specified cases, including exchanges of assets as part of an internal restructuring, the revaluation of assets when contributed in kind to the capital of another resident company, or the disposal of assets in connection with mergers or demergers, as well as restructuring undertaken to establish a holding company or to obtain a stock exchange listing in the State.
To ensure that this tax incentive is available only for restructurings based on genuine economic considerations, Article 2 sets out several conditions. In particular, both the asset transferor and the transferee must be tax residents of the State of Qatar and have been related within the same group for at least 12 months prior to the transfer of the assets. The Resolution also requires a genuine economic reason for the asset transfer and an ownership or control relationship of at least 75% between the parties concerned, either directly or through a common person within the group.
In addition to the above conditions, Article 3 imposes a number of subsequent obligations to ensure that the restructuring’s economic purpose continues to be satisfied. These include maintaining the related-party relationship between the asset transferor and the transferee for at least two years from the transfer date, as well as retaining the assets for a similar period in certain restructuring cases. The Resolution also makes continued entitlement to the tax incentive conditional on completing certain restructuring-related steps, such as a capital increase in the case of a merger, a contribution to the capital of a holding company, or a stock exchange listing, within the prescribed time limits.
From a regulatory perspective, Article 4 sets out the requirements governing the tax incentive’s application. These include recognising transferred assets at market value or net book value in accordance with International Accounting Standards, compliance by the asset transferor with the Income Tax Law when calculating any gain arising from the disposal of the assets, and the requirement that shares or equity interests issued in consideration for an in-kind contribution be registered and not disposed of for two years.
Article 5 sets out the procedures for obtaining the tax incentive. An eligible person must submit an application to the General Tax Authority (“GTA”), accompanied by the required documents, and the GTA must decide on the application within thirty days of submission. If the GTA does not respond within that period, the application is deemed approved, without prejudice to its power to reconsider the application or withdraw the tax incentive if it is subsequently established that the prescribed conditions were not satisfied.
With respect to multinational entities, Article 6 provides that the tax incentive may also apply to them, particularly entities subject to the Global Minimum Tax rules and the Global Anti-Base Erosion Rules. In such cases, assets and liabilities are transferred in exchange for equity interests issued by the transferee or a related person, and future gains or losses are calculated by reference to the historical net book value of the assets. Article 7 of the Resolution exempts these entities from certain conditions and requirements set out in Articles 2 and 4.
Finally, Article 8 provides that, if the prescribed conditions are not complied with, the capital gains arising from the transactions referred to above become taxable from the year in which the tax incentive was obtained, and the resulting gain is calculated in accordance with the Income Tax Law and its Executive Regulation.
The Resolution reflects the Qatari legislature’s move toward adopting the principle of tax neutrality in corporate restructuring, a principle recognised in many advanced tax systems. This approach can reduce tax burdens that might otherwise impede the reorganisation of corporate structures, thereby enhancing the flexibility of the business environment and encouraging mergers and acquisitions, as well as the reorganisation of economic groups within the State.
