Qatar

Not just a token effort: a new digital assets framework in Qatar

Qatar, including the Qatar Financial Centre (“QFC”), has adopted a ‘wait-and-see’ approach in relation to regulating digital assets. Whilst other jurisdictions, notably DIFC and Bahrain, have moved ahead with laws governing digital assets, blockchain and cryptocurrencies, Qatar has waited to introduce its own rules. Dealing in cryprocurrencies has long been prohibited in Qatar, with the QFC issuing an alert in 2019 reaffirming that virtual asset services cannot be conducted in or from the QFC. In 2022 the Qatar Central Bank (“QCB”) moved swiftly to clarify that trading in cryptocurrencies remained banned following some erroneous press coverage that a crypto exchange had been authorised to operate in Qatar.

With the impending Token Rules and Digital Asset regulations (which as noted are still subject to consultation), Qatar would for the first time have both the platform to encourage and nurture FinTech businesses and the regulatory framework to regulate and promote digital asset activities.

Matthew Heaton
Partner, Head of Office, Head of Banking & Finance - Qatar

In October 2023, Qatar launched a consultation on its proposed framework to regulate digital assets. The consultation, which has QFC as the body with responsibility for regulating digital assets in Qatar, includes several distinct elements, as well as some amending rules to make consequential changes to other existing regulations. The key tenets are:

Investment Token Rules 2023 (“Token Rules”)
Digital Asset Regulations 2023 (“Digital Asset Regulations”)

The Token Rules creates a formal framework to introduce rules governing the treatment of investment tokens and requiring any person undertaking such activities to be appropriate authorised by the QFC. The Digital Asset Regulations defines what constitutes tokens in Qatar, and regulates ownership, rights in the underlying assets represented by the tokens and transfer of tokens. The regulations also set out the process for obtaining authorization.

Implications for Qatar and the QFC
Previously it was not possible to undertake activities relating to digital assets or tokens in Qatar or the QFC. As other jurisdictions in the region introduced laws governing this area, Qatar was ruled out as a place to do this nature of business, inhibiting its attractiveness as a place to do business.

The new regulations create a framework for digital assets that for the first time formally permits companies to undertake activities relating to digital assets in Qatar. The regulations provide a transparent structure relating to the ownership and transfer of tokens, including trading and exchange arrangements. The regulations are underpinned by the QFC courts, which have a robust reputation for transparency and expertise in dealing with disputes relating to complex matters, and will provide a clear and precise framework governing digital assets. Dealing in cryptocurrencies (or tokens which do not represent underlying assets) will not be allowed in Qatar or the QFC under the new regulations.

Qatar, and the QFC in particular, has attracted a great deal of direct foreign investment over the past decade or more. However, to date entities wanting to trade in digital assets could not do so in Qatar, meaning that FinTechs and other industry players were forced to establish elsewhere. That could soon change.

Qatar has worked hard to establish itself as a hub for fintech, with incubators, seed funding and technical expertise and mentoring available. A very notable part of this strategy is the Qatar FinTech Hub, an incubator and accelerator for FinTech start-ups. With the impending Token Rules and Digital Asset regulations (which as noted are still subject to consultation), Qatar would for the first time have both the platform to encourage and nurture FinTech businesses and the regulatory framework to regulate and promote digital asset activities. It would be a genuine step forward for anybody looking to set-up in the region given the myriad other benefits of establishing a presence in Qatar.

Contact Partner:
Matthew Heaton

Having a gas: Qatar outlines its priorities for 2024

The FIFA World Cup 2022 was, as heavily documented before, a genuine watershed moment in Qatar’s development. Along with the physical transformation that hosting such a major event gave rise to, with roads and stadia and a metro system, there were profound changes to the legal system. In many ways, the real legacy of the FIFA World Cup 2022 is not the amazing public transport system or elevated interest in football, rather the improved rights for workers and improved safety regimes that were introduced specifically for the tournament.

In 2024, Qatar is focusing on its attention on the Qatar National Vision 2030. Its recently announced budget outlines increased spending on health and education, as the country seeks to raise living standards and quality of living.

Matthew Heaton
Partner, Head of Office, Head of Banking & Finance - Qatar

In 2024, Qatar is focusing on its attention on the Qatar National Vision 2030. Its recently announced budget outlines increased spending on health and education, as the country seeks to raise living standards and quality of living. Qatar is also making a concerted effort to increase its attractiveness as a place to do business, to attract investment from across the GCC and beyond and to make the country a place that workers want to live in. Specific legal developments which will support these goals during 2024 and beyond include:

100% foreign ownership for most industries: it is now possible for 100% foreign ownership of companies in Qatar, in addition to the Qatar Financial Centre. This simplifies establishing businesses in Qatar. We explore this further in a separate article appearing in this publication focusing on Qatar's Business Renaissance.
ESG: Qatar has introduced enhanced ESG reporting requirements for companies listed on the Qatar Exchange, a reflection of the country’s increased focus on sustainability.

Enhanced labour laws: these provide a statutory structure, including a wage protection system, freedom to move jobs and enhanced safety protections. These rules are actively monitored and enforced. There is also a pilot scheme to allow working mothers in the government sector to work reduced hours, to encourage female participation in the workforce.
Tax: along with the rest of the GCC, Qatar is anticipated to introduce VAT (likely in 2024) to meet its global minimum tax obligations
Digital assets: as outlined here, the Qatar Financial Centre is introducing new regulations to permit and govern digital assets.
Investment and Trade Court: 2024 is expected to see further development of the new courts introduced by Qatar to streamline business-related litigation, cutting significant time off the period needed to bring a case.

The significance of the recently announced 2024 state budget is that the government will continue to invest in the social development of the country, with almost 20 per cent of the budget allocated to the health and education sectors. Qatar recently published a public/private partnership framework, which has already led to the opening of new schools under its auspices. With the increased budget allocation for education, this trend looks set to continue.

From a legal perspective, 2024 is going to be a period of evolution rather than revolution, with anticipated changes focusing mainly on refining and improving the existing legal system. However, Qatar is expanding its LNG production and is making concerted efforts to diversify the economy away from hydrocarbons. This means that Qatar is becoming an even more attractive place to do business. The evolution of its legal system makes it cheaper and more transparent to set up a business, ensures that workers have more clearly defined and extensive employment rights, and the new courts ensure making a claim is much quicker and more certain. 2024 should therefore be a year of opportunities in Qatar.

Contact Partner:
Matthew Heaton

Qatar's Business Renaissance: Unveiling Streamlined Procedures for Dynamic Development

In the fast-evolving landscape of global business, Qatar has emerged as an inspiration of progress, diligently working to foster a business-friendly environment and attract foreign investment. Positioned competitively among its regional counterparts, Qatar has embarked on a journey aligned with the goals of Qatar National Vision 2030, aiming to create a robust and conducive atmosphere for both domestic and international enterprises.

One of the crucial aspects of this transformative journey lies in the legal domain. Qatar has been actively working on continuous improvements in various areas such as foreign investment, labor matters, and dispute resolution. Notably, recent legal advancements underscore Qatar’s commitment to prioritizing flexibility, transparency, agility, and ease of doing business:

The enactment of Documentation Law No. 1 of 2023 marks a significant milestone in Qatar's commitment to facilitating business operations. This law introduces the concept of the "Notary Public," aiming to simplify and expedite the process of documentation, authentication, and date certification—whether done manually or electronically. Beyond mere procedural enhancements, the law addresses social needs by offering solutions for individuals facing challenges in complying with documentation processes. This inclusive approach considers individuals with conditions such as deafness, muteness, the inability to provide a signature, limited writing skills, and those who do not speak Arabic, ensuring accessibility to the services provided by the Notary Public for all. The Law has also permitted the Minister to entrust any individual other than an employee of the Documentation Department to carry out all or some of the duties of a notary public. Appointing a private notary public, in addition to a public notary public, is paramount to safeguarding the interests of parties involved in complex legal transactions.

Qatar's strategic legal reforms and developments underline its dedication to making business operations more straightforward. By simplifying procedures, expanding services such as the “Notary Public” and the “Single Window”, Qatar is positioning itself as a prime destination for foreign investments.

Ahmed Jaafir
Partner, Head of Corporate Structuring - Qatar

After the introduction of Law No. 1 of 2019 regulating the investment of non-Qatari capital in economic activity stands out as a pivotal step in enhancing the country's appeal to foreign investors. Qatar demonstrates its proactive approach by continuously eliminating certain requirements and conditions with the expansion of permitted activities, thereby simplifying the overall process and fostering a more attractive and investor-friendly environment for non-Qatari capital, aligning it with the evolving economic landscape of the nation. This also comes in preparation for strategic expansion and with the aim of overcoming the most important obstacles to strategic expansion, which may include the acquisition of local or foreign companies through private placement.
In furtherance of Qatar's commitment to fostering domestic and foreign investment, the introduction of the 'Single Window' initiative represents a pivotal development. The Single Window initiative encompasses the comprehensive establishment of legal entities, such as companies and branches, as well as the issuance of various licenses. This digital framework empowers investors to electronically submit applications and remit fees from any location across the world.

Qatar's strategic legal reforms and developments underline its dedication to making business operations more straightforward. By simplifying procedures, expanding services such as the “Notary Public” and the “Single Window”, Qatar is positioning itself as a prime destination for foreign investments, with a vision that includes fostering innovation, supporting entrepreneurship and economic growth.

Contact Partner:
Ahmed Jaafir

Contributing Author:
Joyce Abi Abbood