The Qatari Financial Centre (QFC) was established by the government of Qatar in the year 2005 to assist in diversifying Qatar’s economy so that it would become less reliant on oil and gas. QFC intends to do so by offering an alternative to local and international investors wishing to establish companies in Qatar under a different system than the one under Qatar’s Companies Law No. 11 of 2015.
Since its establishment about 10 years ago, QFC has succeeded to a large extent in fulfilling its objective of becoming a world-class business and financial center of the highest professional caliber in not only in the region but worldwide as well. For example, in 2013, the QFC was awarded the Best Financial Center Award in the Middle East from Global Investor magazine. I believe QFC has achieved such recognition mainly for the following reasons:
First, QFC offers a transparent and professional regulatory regime and legal system. The legal system is based on English common law (most countries in the Middle East base their laws on civil law). Also, the QFC provides access to an independent judiciary in the form of the Qatar International Court and Dispute Resolution Centre.
Second, QFC has one of the most competitive tax environments in the world with a tax rate of just 10% on locally sourced profits.
Third, unlike other business and financial centers in the GCC, QFC offers the advantage of a free zone or offshore center without being one. The QFC is a fully onshore jurisdiction that allows QFC companies to operate in Qatar and elsewhere just like other local Qatari companies established under the Companies Law.
Fourth, QFC companies may be fully owned by non-Qatari natural or legal persons, which is not the case for companies established under the Companies Law as the ownership of Qataris in a company must not be less than 51% of its capital (few exceptions apply).
Fifth, the QFC permits QFC companies to engage in diverse activities. The permitted activities are divided into two categories: Financial Services and Non-financial Services. The Financial Services include banking, asset management, insurance & reinsurance, investment advice & investment services, and fiduciary businesses. Non-financial services include, but is not limited to, the business of providing professional services, such as audit, accounting, tax, consulting and legal services, investment grading, and ship broking and shipping agents.
In light of the above, the reasons for establishing a company are compelling and arguably unmatched by any other financial center in the region, such as the Dubai International Financial Centre (DIFC), which is a free zone and therefore it restricts companies from doing business outside of its premises while the QFC is an onshore center that does not restrict companies from doing business outside of QFC, whether such is in Qatar or abroad.
It is also important to note that the establishment of a company in QFC process is straightforward and is relatively fast. The first step in the process is to provide QFC with the Business Case document, which contains information on the applicant and information on the would-be established QFC company. The QFC will then review the said document in usually a two weeks period and then they will indicate to the applicant whether or not they require further information or documentation. If they require additional documents from applicant, then they may take 2 weeks more to review the amended Business Case. Once they approve the Business Case, the applicant proceeds to submitting a formal application to establish its company in the QFC and such process usually completes in one month period. Once the application has been completed and approved by QFC, the QFC company becomes incorporated.