‘Inactive Companies’ Urged To Cancel Their Commercial Registration
January 31, 2022
Pursuant to the General Tax Authority’s circular (“Circular”), Qatari companies should have filed their 2020 tax returns prior to the end of the extension period on December 31 to avoid financial penalties. According to the Circular companies and establishments owned by Qatari and GCC citizens that are exempt from income tax and whose share capital is less than QR 1 million, and an annual revenue of less than QR 5 million should have submitted their tax returns.
Those companies that have not filed their returns according to the Circular and also fail to submit financial statements are liable to pay financial penalties of QR 500 for each day of delay (up to a maximum of QR 180,000) according to Article 24 of the Income Tax Law.
With this filing requirement in mind, and to avoid penalties, the Qatar Chamber (“QC”) recently called on Qatari businessmen who own permanently inactive companies to cancel their Commercial Registrations (“CR”).
The following types of companies may cancel their CRs through the Ministry of Commerce and Industry directly without referring to the General Tax Authority:
- 100% Qatari-owned companies;
- Qatari companies with foreign partners but that do not operate and do not have a commercial license
- Qatari companies with GCC partners and an expired CR; and
- Companies with a foreign partner that have not renewed their CR for more than 10 years.
However, Qatari companies with a foreign partner and an active commercial license must submit tax returns for the last fiscal year, pay all tax obligations, if any, and submit a tax clearance request through the electronic tax portal.