UK-Qatar Tax agreement
The double taxation agreement between the UK and Qatar which was signed in June last year entered into force on 15 October 2010. HMRC have recently published a copy of the explanatory memorandum to be read in conjunction with the double taxation agreement.
The agreement seeks to avoid double taxation in relation to income tax, corporation tax and capital gains tax in the UK and the taxes on income in Qatar referred to as Qatari tax. Important features of the agreement include the exchange of information and zero rate withholding tax on most dividends and interest payments.
The agreement is effective from 1 January 2004 for profits, income and gains from shipping and air transport and from 1 January 2011 for taxes withheld at source, and for other taxes, in respect of tax or financial years beginning on or after 1 January 2011.
A protocol which makes some amendments to the double taxation agreement was recently signed in Doha, Qatar. The protocol has been drafted to clarify the double taxation agreement by replacing the phrase ‘by persons who are not residents of Qatar’ with the phrase ‘by persons who are not residents of that other State’. The protocol to the double taxation agreement will come into effect once both governments have finalised their respective legislative procedures.