Up Again Qatar: Government Relief and Tax


1. Legislative changes: are there any additional processes or support which have been introduced as a response to the pandemic which I may not have considered previously?

There have been no legislative changes made to the bankruptcy provisions of the Commercial Law in relation to COVID-19. Generally, the bankruptcy provision of the Commercial Law is underused.

2. Is there anything else I should look out for?

No. We will provide updates if significant legislative changes are announced.


3. What is the position with respect to the applicability of emergency tax measures , including

a. what they are and apply to;

b. when they are expected to be phased out on or following a return to business; and

c. whether any transitional periods are likely to apply.

The General Authority of Customs has waived customs duties on food and medical products for six months.

The General Tax Authority has extended the deadline for corporate income tax filings for the financial year ending 31 December 2019 from 30 April 2020 to 30 June 2020. A further extension may be granted beyond this date.

The Qatar Financial Centre (QFC) will provide deadline extensions for tax filings for QFC licensed entities without these entities incurring late filing penalties in addition to reducing the rate of charge due on the late payment of tax to 0% from 1 March 2020 to 31 August 2020. This means that a QFC-licensed entity that extends their tax filing due date will not suffer any late payment charges until 31 August 2020. The QFC will also provide deadline extensions for filing audited financial statements by two months.

4. Are there specific steps that businesses should take to prepare for these tax measures being phased out – for example new timing of

a. payment obligations (and therefore likely pressure on cash flow); and/or

b. filing of returns?

The tax measures are temporary and will be phased out after the deadlines. It is possible that the General Tax Authority or Customs Authority will introduce further concessions as a response to COVID-19.

5. Should the impact of emergency tax measures be reconsidered by businesses – e.g. are there certain legal transactions (such as sales or reorganisations) that parties should preferably postpone or accelerate?

With respect to the customs duty concessions, advantages may be obtained by appropriately timing the importation of goods into Qatar.

6. Are there any additional measures proposed, in particular any that are targeted at particular sectors (e.g. aviation)?

No further measures are proposed at the moment.

7. Are there any sectors or interest groups that are now putting forward, or may in the near future request, special tax measures?

This is unknown at this stage.

8. Which taxes might be increased to address the financial burden caused by the crisis, for example,

a. are there political commitments or policy trends that might indicate the likely focus of any tax increase in the future (e.g. to maintain low corporation tax, but to increases taxes on personal wealth)

b. measures to broaden the tax base, such as digital services taxation and a pre-emptive response to the OECD/ G20 Inclusive Framework on BEPS (“BEPS 2.0”)

No tax increases have been announced.

9. Are there other actions that ought to be considered by businesses in your country e.g.

a. revisit past tax filings to claim carry back of losses;

b. revise or update preliminary tax assessments;

c. claim bad debt relief for VAT output tax

We are not aware of any other actions that should be considered by businesses at this point.


10. What do you need to consider in terms of your funding requirements for returning to business and are there any return to business financial assistance packages being made available by government?

If your business has temporarily closed, there is likely to be a delay between the incurrence of costs to restart your business and the consequent receipt of income. You should consider whether you have sufficient working capital during any interim period. In particular, if you have any credit remaining available under any revolving credit facility, there will likely be a draw-stop on new funding if a default (or occasionally event of default) is continuing.

Please refer to the Qatar government financial and economic incentives discussed in question 4 in the Premises and Workplace section of these FAQ.

11. How will funding a return to business, including taking on additional indebtedness, impact on your financial or other covenants?

A borrower should consider:

  • whether any new funding arrangements are permitted under the terms of its existing finance documents and whether any consents or subordination arrangements are required;
  • how any additional indebtedness (and any finance costs associated with it) will be treated in financial covenant calculations and whether any amendments or waivers to financial covenants are required; and
  • whether any equity issuances (and the terms of them) are permitted by its finance documents.

Particular considerations regarding financial covenants include:

  • the decrease in revenue/EBITDA over the lockdown period;
  • any likely tapered increase in revenue/EBITDA as lockdown restrictions are relaxed;
  • costs for restarting the business;
  • payment of any deferred payments (i.e. rental payments, business rates); and
  • incurrence of any additional indebtedness.

Given the negative impact on the financial condition of a number of businesses, if the applicable margin paid under a loan is subject to a ratchet, it will likely increase if your financial condition deteriorates (e.g. as leverage increases), and that margin is usually set at the highest level if an event of default is continuing.

12. Are there any remedies such as equity cure or margin ratchets that you should be checking on to provide liquidity to prevent a default or improve their financial position?

In some circumstances, it may not be possible to agree a waiver or amendment to financial covenants, so it may be prudent to review any equity cure rights in your credit agreement.

For example, if you have a net leverage maintenance financial covenant, it might be beneficial to contribute additional shareholder capital ahead of the next testing date, as such additional cash in the business (as at the testing date) will usually be taken into account (sometimes as a pre-cure) when determining net debt for the purpose of testing net leverage.

It’s also worth checking the number of times that a breach of a financial covenant can be cured and the frequency with which the cure right can be exercised by sponsors/shareholders.

13. What practicalities do you need to consider in relation to audit requirements?

Businesses should ensure they can meet the timeframes for delivering audited financial statements to their financiers under their reporting obligations in their finance documents.

Businesses should take into account whether social distancing/work-from-home measures will hamper the audit process, and engage with lenders on the expected timetable for when the audited financial statements can be published.

14. What is the process if I need any amendments made or waivers given under my loan documentation (including in respect of financial covenants)?

Debtors should engage with their lenders to explore whether they are amenable to waive or amend the terms of existing finance documentation. The documentation will set out the different lender consent thresholds required. Amendments to financial covenants generally require consent of a majority of lenders (typically 66.6%).

As a practical point, in our experience, lenders tend to be more receptive to requests for amendments and waivers if a borrower presents them well thought-out and reasoned plans to address any issues in the business, supported by appropriate evidence and relevant forecasts.

If the requisite consent is obtained, the changes can be documented through an amendment and restatement agreement or amendment and waiver letter (depending on the level of changes and their complexity).

15. Dealing with creditors, including amendments and waivers – Bonds

a. If I can’t comply with the terms of my bond covenants who do I need to notify?

If a default has occurred or is likely to occur, communication with bondholders or certificate-holders will often be required through a combination of:

  • public announcements filed on the exchange where the bonds or sukuk are listed and the website of the issuer or obligor;
  • notification to the relevant Qatar authorities in case of bonds or sukuk that have been offered to the public; and
  • simultaneous notice to the trustee, delegate or fiscal agent (as determined by the governing document of the bonds or sukuk).

Key default concerns in the near-term for bonds or sukuk, are likely to be:

  • inability to file necessary reports (which may include accounting certifications that may not be made);
  • failure to report timely on any material developments (if the documentation requires such reporting); and
  • inability to pay principal or interest (i.e. coupon or periodic distributions).

b. If I need to ask for a waiver or amendment to the terms of bonds issued by my business what steps do I need to take?

The terms and conditions applicable to the bonds and sukuk will usually have a detailed waiver and amendment procedure spelled out, with the majority applicable to the relevant waivers and amendments.

It should be expected that consent from bondholders/certificate-holders representing a simple majority of principal amount outstanding will be required for amendments to non-economic terms (such as ability to incur additional debt), but that economic terms (e.g. maturity, rates of return, payment dates currency) or changes to security package will likely require 90% to 100%, depending on the terms and conditions.

As a priority, an issuer or obligor should have its legal counsel review the amendments and waivers section of the documentation, and obtain legal on prudent public communications under applicable securities laws and regulations.

c. What is the process for contacting bondholders and holding meetings to agree changes in the terms of my bond documents?

Bondholder or certificate-holder meetings, if required, will be governed by a combination of the bond or sukuk governing documents, the rules of the relevant clearing systems, and onshore or offshore statutory provisions.

16. Is the availability of any return to business funding or relief either (a) conditioned on the use of proceeds for green or social purposes or (b) linked to sustainability-related outcomes? If so, what are the applicable purposes or outcomes?

There is no return-to-business funding or relief available in Qatar.