How do I set up a Trading Company in Qatar?
Qatar’s economy has seen consistent growth in recent years and has been ranked the 29th most competitive nation in the world. Qatar has supported both economic and population growth in recent years and has development plans in place to "transform Qatar into an advanced society capable of achieving sustainable development”.
In 2010, the State of Qatar was awarded the 2022 FIFA World Cup, the first of its kind to be hosted in the Middle East. Following the announcement, Qatar has invested exponentially in preparation for an amazing tournament.
Although Qatar is the smallest nation ever to host the World Cup, the state has seen major development and investment in preparation for the event and has welcomed all enterprises that wish to help deliver the infrastructure and share the ambition to leave a lasting legacy. Hosting an event of this scale comes with a huge number of benefits, opportunities and advancements that businesses can leverage both now and in the years to come.
With an expected 1.5 million international visitors and over four billion television viewers tuning in to watch the World Cup, the global spotlight will be on Qatar for a whole month. This in turn will lead to a significant increase in tourism and investment. Further, Qatar boasts ease of accessibility with its location between Asia and Africa, as well as it being a key destination for major European airports.
In total more than $200bn will be spent in preparation for the event. This amount covers not only stadiums but also projects such as roads, airport expansion and hospitals. The biggest infrastructure projects include Al Bayt Stadium (60,000 seats), Al Wakra Stadium (40,000 seats), Hamad International Airport expansion, Msheireb Downtown Doha ($5.5bn project redeveloping the historical heart of Doha), the Doha Expressway System, providing vital transport links and the new Hamad (Doha) Port ($7.4bn project and expected to be one of the largest sea ports in the region).
It has been widely broadcast that the surge in infrastructure investment will not slow down after the tournament, and will continue, as the country works towards the Qatar National Vision 2030. By 2030, Qatar aims to be an advanced society capable of sustaining its development and providing a high standard of living. Qatar’s National Vision guides the country’s development programme and provides a framework within which national strategies and plans can be developed.
Qatar is a lucrative destination for foreign companies and the government has introduced a number of incentives to encourage investment. Furthermore, the government has established a strategy to simplify doing business in the country, which is applicable across many sectors, including manufacturing, hospitality, real estate, energy, health and education.
What is a Trading Company?
A Trading Company is defined as a business which supplies or distributes various types of products to consumers, businesses, or the government. Generally, trading companies can be categorised into two broad groups: retailers, who sell to the general public and importers or wholesalers, who hold stock and deliver products to other businesses, who in turn sell those products to the public.
Steps to setting up a Trading Company in Qatar
- Create a business plan
The first step towards setting up a company is creating a comprehensive business plan. This requires thorough research and the more information that you can put together at this stage, the easier the decisions that need to be made thereafter will become. The following are some of the things which should be considered when creating your plan:
- Product and sourcing - What do you intend to sell and is there a need in the market for it? How will you source this product?
- Market analysis and competitors - Does this product currently exist? Is there a market for it? If it is being sold by other organisations, through which channels is it being sold?
- Cost analysis and initial investment - What are the costs associated with manufacturing/importing this product? What are the costs associated with setting up the company and obtaining a trading licence?
- Logistics and import legislation - How will you transport the product from manufacturer to consumer? What are the costs? What are the import laws and duties in Qatar?
- Marketing tactics - How will you promote and effectively market this product to the public?
- Premises requirements - Does your company have a need for office space or storage facilities? Where should these be located?
- Select the company structure
It is crucial to accurately define the activities that you intend to carry out and also specify the goods that you wish to trade, in order to select the best setup option and licence for your trading requirements. In most cases to be able to trade physical goods, the most popular type of business setup is the Limited Liability Company as this gives you unrestricted access to the local market.
- Different Licences
In order for you to select the correct licence and jurisdiction for your company, you need to be informed about all the available types on the market. In Qatar, there are four types and these are:
- Free Zone
- Limited Liability Company
- Branch Office
- Trade Representative Office
Trading in a Free zone
There are two free zones under construction in Qatar. One near the new Doha Port, one near Hamad International Airport (HIA), others are under consideration. To date there are no specifics in terms of time frames or company structures allowed within these free zones.
There are two existing free zone type entities, these are:
- Qatar Science and Technology Park (QSTP) - QSTP are only offering free zone setup arrangements to companies involving themselves in major research and joint ventures in Qatar and therefore entry to QSTP is extremely limited.
- Qatar Financial Centre (QFC) - QFC was intended to provide an environment to attract solely international and domestic financial service institutions and service providers in support of those institutions. However, the QFC is now willing to accept applications for business registration from other types of service providers who are not associated with the financial services sector, for example, in the fields of management consultancy, recruitment and sports and entertainment. The QFC aims to operate to international standards and provides a legal and business infrastructure for those operating within the centre. This process is started by completing an application to enter QFC, after which they review and determine whether or not the business wishing to enter is a strategic fit with the QFC. They will not accept applications from businesses involved in trading and construction, as these are not considered ‘service provider’ businesses. Tax is payable under QFC at the standard corporate rate.
Limited liability company
One of the main benefits to setting up an LLC is that the foreign investors with non-Qatari nationality may invest only through the medium of a company incorporated in Qatar, in which one or more Qatari nationals or a 100% Qatari owned company, hold no less than 51% of the share capital.
One of the key advantages of an LLC setup is that the partners have limited liability exposure due to their share in the total investment capital. The minimum share capital to obtain the commercial registration, was QAR 200 000. This has been recently amended as a result of the new Companies Law, No. 11 of 2015 and currently, there is no set limit for the share capital deposit and no requirement to deposit the share capital.
A Branch Office in Qatar is a registered company in the state of Qatar that does not require a sponsor. This allows the foreign business to maintain 100% ownership. However, in order to establish the branch, the company must have a government or quasi government contract. The law specifies that branches are not to be considered as separate legal entities from the principal company. Any foreign company which aims to execute a contract with the Qatari Government has the flexibility to set up a branch office in Qatar provided they abide by the regulations set by the Ministry of Qatar, similarly, they could establish an LLC and service the government contract through that entity.
Trade Representative Office
A foreign company may open a representative office without a local partner in Qatar. These offices promote the goods and services of the parent company. These offices are not allowed to conduct any financial transactions related to the company’s activity in Qatar which results in tax exemption.
The Trade Office cannot import, export or sell any product in the State of Qatar and cannot promote any product not produced by the company. The purpose of this type of entity is only to hire staff in Qatar and to build initial relationships in the country.
Finding a Local Partner
If you choose to set up an LLC, it is a requirement of Qatar Commercial Company’s Law that you nominate a local shareholder to hold the majority share of 51% of the company. This can be a corporate nominee (a 100% Qatari national company) or an individual sponsor (a Qatari national). There are differences between the two types of partnership and the choice of which option is best for your company will depend on several different factors.
Venture Partner Qatar provide a professional, dedicated corporate partnership platform for limited liability companies with a focus on providing the foreign party with security and control of the business. Venture Partner becomes the local shareholder as required by Qatari law, whilst we guarantee that the client retains full control of all elements of the business. We will ensure that, as the local partner we will always be available to sign all necessary documents to enable the client to manage the businesses as required by Qatari Law. We provide a 3-month exit/sale strategy with no penalty as standard, with a fixed annual fee to ensure visibility.
How can Venture Partner Qatar help with setting up a trading company?
Venture Partner Qatar has an extensive team with experience and knowledge in providing professional assistance and guidance for international companies, entrepreneurs, and investors on the best way to set up businesses, to deliver services and sell products in the local Qatar market.
Our dedicated operations teams and PROs have strong relationships with local government authorities to ensure that the correct information is provided, and requirements are met in an effective and timely manner.
If you need assistance in setting up a trading company in Qatar, and for further information on any other related company setup, local partner or PRO service matter in Qatar, do get in touch with us on +974 4478 8765 , email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.