Qatar's free zones and planned Media City

Out-Law Guide | 03 Mar 2020 | 11:34 am | 5 min. read

Qatar has a number of 'free zones' intended to promote and encourage foreign investment into the state by offering specific commercial concessions which are attractive to international businesses.

Free zones are areas within Qatar which are essentially treated as being separate areas outside of the domestic state area for regulatory and customs purposes. This impacts on tax, customs rules and regulations, and corporate establishment processes.

Setting up in a Qatar free zone gives companies access to fast growing nearby markets in the Middle East, North Africa, Europe and Western Asia, and it is anticipated that an influx of new businesses to these areas will contribute to the economic growth of Qatar and increase the diversification of the Qatari economy.

In 2018, Qatar created an independent authority called the Qatar Free Zones Authority (QFZA), which is responsible for the development and regulation of free zones in Qatar and the promulgation of regulations for the free zones in accordance with the policies and strategy of Qatar.

There are currently two free zones in Qatar:

  • Ras Boufantas Free Zone, a 400 hectare area adjacent to Hamad International Airport; and
  • Umm AlHoul Free Zone, a 3,000 hectare area adjacent to Hamad Port.

Separately, Qatar has announced its intention to establish a 'media city' for the promotion of the media-related activities. The media city is a separate entity to the free zones, established under different laws. However, it will also offer special concessions to the companies establishing within it.

Establishing in a free zone

Companies establishing in the QFZA enjoy the following benefits:

  • 0% corporate tax for renewable 20-year periods;
  • 100% foreign ownership with full capital repatriation;
  • branch or LLC structuring options;
  • access to investment funding;
  • robust data protection and intellectual property laws;
  • zero customs duties;
  • ·no individual income tax;
  • full access to Qatar's double taxation treaty network with over 65 countries.

The QFZA's priorities are industries and companies that have the potential to contribute significantly to Qatar's economic diversification and growth.

Setting up in a Qatar free zone gives companies access to fast growing nearby markets in the Middle East, North Africa, Europe and Western Asia.

To establish a company within a free zone, the applicant must submit an application which includes:

  • brief background on the applicant;
  • business plan;
  • statement of the applicant's Designated Land requirements, including the type of property, gross internal area required and the term than the land is required for;
  • statement of the applicant's intended activities by reference to the Schedule of Permitted Activities;
  • application fee.

If approved, the applicant – now a 'free zone entity' – must enter into a lease in whichever free zone area they operate within, either for an office, a building, or a land rent to construct its own building. It is not permitted to own real estate within the free zones.

The free zone regulatory regime

The QFZA was established by Law No. 34 of 2005, as amended by Legislative Decree No. 21 of 2017 and the 2018 FZA Licensing Regulations.

The QFZA is an independent regulatory authority and provides all the services a free zone entity needs in particular company registrations, licensing and related services. It oversees the entire establishment process for entities in Qatar's free zones.

In particular, the QFSA promotes itself as providing:

  • a clear and transparent operating environment;
  • strong intellectual property and data protection laws;
  • compliance with international standards and business-friendly FDI regulations;
  • access to the Qatar International Court.

Dispute resolution in Qatar's free zones

The Qatar International Court and Dispute Resolution Centre (QICDRC) and the QFZA have signed an agreement to extend the jurisdiction of the QICDRC to cover entities operating in zones administered by the QFZA.

This in itself is a significant step towards attracting new business and foreign investment into Qatar's free zones as the QICDRC is international in nature and is made up of judges from a number of international jurisdictions.

Parties which take their disputes to the Qatar International Court can do so without filing fees, and in the knowledge that the judgments can be enforced 'onshore' within the state of Qatar. Proceedings are conducted in English, and representatives from international jurisdictions are permitted to appear before it.

The international aspect of the court adds to both to access to justice for foreign parties and the confidence of rulings by an independent international judiciary.

Qatar Media City

Qatar is in the process of establishing a 'media city' under Law No. 13 of 2019 on the Establishment of Media City. This law was published in the Official Gazette of the State of Qatar on 20 June 2019.

The law gives the new Media City a number of powers, including to:

  • grant licences, permits and approvals to individuals, companies and other entities wishing to operate in Media City including radio and television broadcasting licences, and press and distribution licences to newspapers, magazines and books of licenced companies;
  • regulate business and activities inside Media City;
  • conduct research and consultancy work related to laws and rules regarding the regulation and promotion of media and scientific research;
  • provide administrative, logistic and technical services to licenced companies that carry out activities of all kinds in the Media City;
  • establish business 'incubators' to support digital and technology media initiatives;
  • establish a media investment fund.

As the name suggests, Media City is being established to promote media related activities including televised media, social media, data technology, e-media and hard copy media and advertisement and publicity services.

Social media will be a core area of focus and one of the early projects of Media City involves the construction of studios where bloggers and social media influencers will have free access to record and edit video content.

Freedom of expression will be a key differentiator of the Qatar Media City. It will have no editorial limits other than a code of ethics requiring media outlets that broadcast from Qatar to be responsible for their content and the way it is expressed.

The activities that may be carried out in the media city are prescribed by law and include:

  • preparing, designing, developing, using and maintaining materials, programmes and databases related to media;
  • electronic commerce businesses related to media and media-related industries;
  • issuing, publishing and distributing newspapers, magazines and books;
  • data technology and electronic media services;
  • establishing media-related business incubators;
  • rights management related to materials produced in Media City;
  • providing media services in any way, including over the internet or any other means of technology;
  • advertisement and publicity services;
  • importing, storing and exporting devices, materials, programmes and products used in the media, or for advertisement or publicity;
  • the storage, supply, distribution and redistribution services necessary to carry out activities permitted in Media City;
  • the commercial activities necessary to provide services to residents, employees and visitors of Media City;
  • participating in studies and research which contribute to the development of media products.

There have been recent comments in the press that Media City may be located at Msheireb Downtown Doha. However, the precise location has not yet been officially announced.

Additional research by Mary Larkin of Pinsent Masons, the law firm behind Out-Law.