In recent years, the State of Qatar has implemented a number of economic reforms consistent with regional trends—including the liberalization of foreign direct investment (“FDI”), allowing foreign investors 100% ownership of companies incorporated in the Ministry of Commerce and Industry (“MOCI”). 

On 7 January 2019, Qatar issued Law No. 1 of 2019, known as the New Foreign Investment Law (the “New FDI Law”) which replaced the previous foreign investment law, Law No. 13 of 2000 (the “Old FDI Law”). The executive regulations to the New FDI Law were issued via Decision no. (44) of 2020 (the “Executive Regulations”), and MOCI has since issued a number of additional legal instruments. 

Overview

The New FDI Law allows for 100% foreign ownership across a much wider range of economic sectors than the Old FDI Law, under which full foreign ownership was limited to certain industries.

As of this writing, MOCI has published a list of approximately 1,000 commercial activities available for 100% foreign ownership. This list is subject to change, but in recent years the list of permitted activities has typically expanded rather than contracted.

This list includes many popular commercial activities, including:

• construction
• trading
• transportation
• hospitality
• accommodation
• entertainment
• education
• healthcare
• technology
• restaurants/F&B businesses

Timelines and Process

Under the New FDI Law, foreign investors must apply to MOCI, which is now required to issue a decision within 15 days of receiving a complete application. This streamlined timeline makes the process easier and more manageable for foreign investors than the Old FDI Law. If no response is received within that timeframe, the application is deemed rejected. Previously MOCI was not under any such time constraint, and it often led to delays in processing.

Post-rejection steps are clearly laid out under the New FDI Law. In the event of rejection, investors can appeal to the Minister of Commerce and Industry (the “Minister”) within 15 days. The Minister must then make a decision on the appeal within 30 days, after which, if no decision is made, the appeal is considered rejected. These deadlines create a more predictable environment for investors.

Government Contracts

The New FDI Law also introduces more flexibility for foreign companies bidding on government projects. Article 5 allows foreign companies to establish a project branch in Qatar when engaged in contracts with the government or semi-government entities, including entities with government stakeholders. Foreign companies bidding for government projects may register a branch in Qatar after the project is awarded, as must then ensure that the branch is fully registered before signing the contract with the government employer.

Restrictions and Challenges

Although the New FDI Law is far more liberal than its predecessor, key restrictions remain. Article 4 prohibits foreign investment in certain sectors—specifically, banking, insurance (unless an exemption is granted by the Council of Ministers), and commercial agencies. Additional restrictions may still be imposed by the Council of Ministers as needed.

In the case of public companies listed on the Qatar Stock Exchange, foreign investors are generally limited to 49% ownership, unless further approval is granted by the Council of Ministers upon the Minister’s recommendation. In recent years, many QSE-listed companies have applied for and obtained approval for 100% foreign ownership.

Companies applying for a foreign investment license must prepare a number of application documents, such as:

• a Business Plan;
• a Financial Analysis;
• a Project Timeline; and
• a Description of value to be added to Qatari economy and society

Additionally, foreign applicants must submit the usual legal documents required for cross-border incorporations, including:

• Constitutional Documents (Incorporation Certificate, Articles of Association, etc.);
• Board/Shareholder Resolutions; and
• A Power of Attorney (if required)

Application documents must typically be translated into Arabic and attested up to the Embassy of Qatar in the respective country. This can be a time-consuming process, and it is critical that a thorough and compliant application is prepared in order to avoid the need to repeat steps.

Under the Executive Regulations of the New FDI Law, additional criteria apply to foreign investors, whether legal or natural persons. Natural persons must not be convicted of a “felony or crime that violated honor or trust” and legal persons must already be legally established in accordance with the laws of their home country. Additionally, the company’s proposed activity in Qatar must be consistent with the purposes of the company itself.

Other Incentives

Incentives to attract foreign investment are another area where the New FDI is impactful.  Customs and tax exemptions, land allocation, and free capital transfer are some of the major benefits. Article 10 potentially allows for foreign investment projects to be exempt from income tax in accordance with the Income Tax Law, and Article 11 exempts foreign projects from customs duties on machinery, equipment, and raw materials necessary for establishment.

Foreign investors can now secure land for their projects through leases or usufruct rights, as detailed in Article 8, which is a significant improvement from the Old FDI Law. Article 14 allows foreign investors to transfer funds, profits, and returns of investments offshore without delay, providing flexibility in financial management.

Impact on Existing Ventures

The New FDI Law will inevitably have an impact on existing joint ventures between Qatari and non-Qatari shareholders. With the door now open to more sectors for foreigners to retain 100% ownership and simpler, more predictable application processes, it may lead to foreign investors reconsidering how they partner with local entities. This could potentially reshape some existing relationships. For example, shareholders in existing joint venture companies could modify their arrangements, create new entities, or wind up their existing companies entirely.

The New FDI Law makes clear that foreign investors with existing stakes in Qatari companies must also go through the application process to increase their ownership beyond 49%. This is another factor for foreign investors to consider when determining how to react (if at all) to the New FDI Law.

Conclusion

The New FDI Law, along with recent legislation covering employment, compliance, real estate and tax law, signal the development of Qatar’s economy and continuation of a regional trend. As some major economies continue to put up barriers on FDI, Qatar and other GCC countries have been opening up their economies to foreign investment—while simultaneously implementing strategic legislation in employment, compliance and other areas.

For more information, please contact the authors: Dean Jaloudi (Partner and Head of Qatar Office) and Jehan Saleh (Associate – GLA Qatar)