7 June 2020 QFC Tax webinar - PowerPoint Presentation

1. 7 June 2020QFC Tax webinar

2. Key Tax Compliance ObligationsTax registration and tax cardTax Accounting periodTax returns filing & payment deadlinesPenalties for non-filing of tax returnCharge for late payment of taxCOVID-19 relief measures Tax Return filing due date extensionLate payment charge rate reductionConcessionary Rate ChargeAgendaRefresh of key QFC tax obligations & outline covid-19 relief measures

3. The QFC E-Services portal is a one-stop-shop for all services, including taxURL https://eservices.qfc.qa/Login/Login.aspxAll tax services and requests should be made via the tax module on the portal. Manual forms and requests are not acceptedYou should receive your access credentials at the time of successful registration with the QFCIf you do not have access, please contact the client affairs team at clientaffairs@qfc.qaThere is a downloadable user guide in the tax module which can assist you to navigate through the portal and understand the various functionalitiesE-services portal

4. Key Tax Compliance Obligations

5. Registration with the Tax Department is mandatory for all QFC firms, whether or not you have commenced licensed activities and whether or not you are exempt from tax. To register, complete the taxpayer registration form on the portal.Any firm who do not register within 18 months from receipt of its QFC licence will be forcefully registered by the QFC Tax Department. Active FirmsIf you have commenced activities you have to enter your Start Date and Year End Dates. These will form your first Tax Accounting Period and are important as they will affect the date your Tax Return is due. Start Date – this is the date you commenced activities under your QFC licence. It is not necessarily the date you first undertake work for a customer/client. It is the date you are “open for business” and able to take on work. Year End Date – this is your chosen financial year end (e.g. 31 Dec). This should be date to which you will make up your first set of accounts. Tax registration and tax card

6. Dormant FirmsIf you have not commenced activities, then tick the “Not yet commenced activities under your QFC licence” box. You will be recognised as a “dormant” entity for tax purposes. You can update your tax registration on the portal once you commence activities and input your start date and first financial year end.Tax Card Once your registration is processed a Tax Registration Card will be issued within 5 – 8 working days. Note that a tax card will not be issued for entities registered as “dormant”.To open a bank account for dormant entities, in place of the tax card, the Tax Department can issue a letter to the bank on its letterhead.Tax card renewal requests also need to be made via the portal. Note that renewal is not mandatory and there is a renewal fee of QR.500.Tax registration and tax card

7. An entity comes into QFC tax charge when it commences its activities.The first accounting period would begin when the QFC entity commenced to trade (as per the tax registration form) and end as per your financial year-endThe first accounting period can be of any length but cannot exceed 18 months from the start dateAn election for a long first accounting period exceeding 12 months, must be made via the portal “First Accounting Period” tab.Tax Accounting period

8. A tax return is due for every accounting period, six months from the end of the accounting periodNo tax return is due if you have not yet commenced activities or are dormantNote that the tax filing due date is different from the due date to file the audited financial statements with the CROTax returns must be filed online together with the supporting accounts, tax computation and other relevant informationThe tax liability is also due on the filing date Examples Tax returns filing & payment deadlineAccounting year endTax filing due datePayment due date30 September 201931 March 202031 March 202031 December 201930 June 202030 June 202031 March 202030 September 202030 September 2020

9. For failure to file Tax Return Note that the tax related penalty would be levied in addition to the fixed penalty.The maximum fixed penalty that can be levied is QR.6,000Penalties for late tax returnsType of penaltyDelay beyond the tax filing due dateAmountFixed penalty1-60 daysQR.3,000Beyond 60 daysQR.6,000Tax related penalty12 months to 18 monthsHigher of QR.10,000 or 10% of unpaid taxBeyond 18 monthsHigher of QR 20,000 or 20% of unpaid tax

10. Late Payment Charge (LPC) is applicable if the tax liability is not paid by the payment due date.LPC is calculated at the rate set by the Director of Tax as published on the QFC Website. It was 5% p.a. up to 29 February 2020. The LPC will apply to unpaid tax and accrue on a daily basis until the tax due is paid. No LPC is incurred if the tax liability as per the return is nilExample; Tax due on 30 June 2019 = QR.20,000. Tax paid on 31 October 2019 (123 days late). LPC = 20,000 x 5% = 1,000 (annual charge) x (123/365) = QR.337 for 123 days. charge for late payment of tax

11. COVID-19 Relief Measures

12. Tax filing extensionsTax Rule 8 allows QFC firms to apply for an extension of their filing due date for up to a maximum of 120 days from the filing due date. Generally when a firm applies for an extension they must have a reasonable excuse for not meeting the filing due dateExamples of a reasonable excuse– fire at premises and documents lost, senior management sick or away due to exceptional circumstances. Examples of excuses not accepted – Did not arrange audit in time to meet the filing deadline, forgot that a tax return was due. tax Return Filing Date ExtensionCOVID-19 RELIEFTwo month extension allowed where COVID-19 has caused delays to business operations.

13. Late Payment Charge (LPC)The due date for payment of tax is 6 months after the year end.The due date for payment cannot be extended.LPC will arise where payment of tax is received after the due dateExample; Tax of QR.20,000 is due on 30 June 2019, but paid on 31 August 2019. LPC due is QR.170 [20,000 x 5% x (62/365)].PAYMENT DUE DATE & LATE PAYMENT CHARGECOVID-19 RELIEFLate payment charge has been reduced to 0% p.a. from 1 March 2020 to 31 August 2020, previously 5% p.a. (see slide 10).Firms who extend their filing due date will not suffer any late payment charges until 31 August 2020, should their tax due also be paid after the payment due date.Example; Tax of QR.20,000 is due on 30 June 2020, but paid on 31 August 2020. LPC is NIL. [20,000 x 0%].The rate will revert to 5% from 1 September 2020 onwards.

14. Important linkhttps://www.qfc.qa/en/Operate/Pages/Tax.aspx

15. Concessionary Rate ChargeArticle 88 includes details of firms who can apply for the concessionary rate of 0% to apply to their Taxable Profits. When these firms first apply for the Concessionary Rate a Concessionary Rate Charge is payable.The charge will either be QR.10,000 or QR.20,000 depending on the share capital of the firm (or parent if it’s a branch).Once the Concessionary Rate is granted it will apply for three further Accounting Periods.Example; Application made in Tax Return for y/e 31 March 2016 submitted on 30 September 2016. Concessionary rate will apply for y/e 31 March 2016, 2017, 2018 and 31 March 2019. Upon reapplication for the concessionary rate to apply the charge will again need to be paid.From above example – charge will be due if election for concessionary rate is again made in y/e 31 March 2020. CONCESSIONARY RATE CHARGE

16. CONCESSIONARY RATE CHARGE – COVID-19 RELIEFFirms applying for the concessionary rate in 2020 will not be required to pay any concessionary rate fee.Example from previous page – application made on Tax Return for y/e 31 March 2020 – No fee payable. The concessionary rate will still apply for four Accounting Periods (e.g. 31 March 2020, 2021, 2022 and 2023).

17. Questions & AnswersContact ustax@qfc.qa