Qatar:
a rising star in the Gulf
Akshay Randeva talks to EMEA Captive about Qatar’s captive offering and how the emirate is looking to differentiate itself from the international competition.
How does Qatar differentiate its offering from other captive domiciles?
Qatar’s exciting long-term prospects for economic growth, legal and regulatory frameworks that are modelled on international best practice and the fast-growing insurance industry itself are some of the factors that underpin Qatar’s attractiveness as a domicile for captives. In fact, the captive insurance industry is one of the three financial services hubs targeted for development by the Qatar Financial Authority (QFC).
Other key differentiators are the strong legal and regulatory frameworks offered by the QFC. The QFC legal system is based on English Common Law, and the risks of conflicts between local and QFC law for QFC licensed firms are minimised by the fact that civil and commercial disputes may be brought before the QFC Civil and Commercial Courts. Moreover, the Qatar Financial Centre Regulatory Authority (QFCRA) has recently responded to an increase in demand for captive solutions by publishing a consultation paper on a series of proposals to review the existing captive regulatory framework (including in relation to protected cell companies). These proposals will further facilitate the development of a regional hub for captive insurance in Qatar, as well as give additional support to insurance intermediaries and captive managers. So Qatar prioritises the establishment of a strong, long-term and business- friendly regulatory framework.
In addition, Qatar’s unique economic growth prospects create significant opportunities for the insurance sector and for other financial service industries. According to the International Monetary Fund’s most recent World Economic Outlook Report, Qatar’s growth in real GDP is expected to rise from a forecast 16 percent in 2010 to 18.6 percent in 2011, driven not only by the oil and gas sector but also the non-energy sectors, setting it apart from other captive domiciles both in the region and internationally.
What kind of financial incentives is Qatar offering to those captives thinking of domiciling in the territory? And how does the tax and regulatory environment compare to other international jurisdictions?
To begin with, all entities operating within the QFC can be 100 percent foreign-owned. Base capital requirements amount to $10 million and $20 million for direct insurers and reinsurers, respectively. For captives, they range from $150,000 to $1 million. In contrast to other regional centres, the QFC does not impose any restrictions on insuring domestic risks located within Qatar. Subject to obtaining the necessary approvals, authorised firms are fully permitted to conduct insurance business with retail customers.
Under the new tax regime, which came into effect on January 1, 2010, all QFC registered companies are subject to a 10 percent corporation
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