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Buying a company in Qatar, or a stake in one, means paying today for profits, assets and obligations built up over past years. Financial due diligence is the work that tests those figures before you sign, so that the price and the sale agreement reflect what is found.
In Qatar the review has a local layer: the General Tax Authority (GTA) can still assess earlier years, share transfers follow set formalities, and the seller’s capital gains tax must be settled before the transfer is recorded.
This guide covers the review, the tax points to check and the Qatari rules that shape the deal, with the official source for each rule.
- GTA review window
- 5 years after filing
- No return filed
- 10 years
- Ownership change notice
- 30 days
- Law checked
- 16 October 2026
The short answer
In short
- Financial due diligence tests a target’s figures before you sign: whether profit is real and repeatable, what the company owes, how much working capital it needs, its tax position and its dealings with related parties.
- The GTA can assess a year until five years after the year in which the return was filed, and for ten years if no return was filed (Income Tax Law Article 37), so open years belong in the review.
- Shares in a limited liability company (LLC) pass by official instrument and take effect from entry in the partners’ register and the commercial register; other partners may have a right to buy first (Commercial Companies Law Articles 237 and 238).
- The seller’s capital gains tax and the GTA’s No Objection Certificate sit in the deal timetable. See capital gains tax in Qatar.
What financial due diligence covers, and what it does not
Financial due diligence is a buyer-side review of a company’s historical and current figures, with a scope agreed before the work starts.
It is not the same as legal due diligence, which is a separate review carried out by lawyers and covers title to shares and assets, licences, contracts, employment and disputes. Commercial due diligence, in turn, looks at the market, customers and competitors. An audit is different again: financial due diligence gives no audit opinion, and it relies on the seller’s records and answers.
The findings feed three things: the price, the terms of the sale agreement (warranties, indemnities and any completion accounts) and the decision whether to proceed. They also feed the valuation: see business valuation methods in Qatar and our business valuation page. Due diligence reduces risk; it does not remove it.
Quality of earnings (QoE): is the profit real and repeatable?
“Quality of earnings” is a term used in deal work, not an accounting standard. It means starting from the reported profit and asking how much of it the business will keep earning under new owners. It starts from the audited accounts and the latest management accounts.
| Adjustment | Why it matters | What to ask for |
|---|---|---|
| One-off income or costs | An asset sale gain or one-time legal cost distorts the trend | An analysis of unusual items by year |
| Owner and family costs | Salaries, cars or housing for owners may be above or below market terms | Owners’ and relatives’ payroll |
| Related-party pricing | Sales, purchases or rent with connected companies may change after the deal | A list of related-party transactions and contracts |
| Revenue recognition and cut-off | Sales booked early, or contract revenue recognised before the work is done, inflate profit | The revenue policy, large contracts and invoices around the year end |
| Changes in policies or estimates | A new depreciation life or provision method can move profit with no change in trading | The notes to the accounts and the auditor’s management letter |
Figures such as “adjusted EBITDA” are management measures, not totals defined by IFRS. For annual periods beginning on or after 1 January 2027, IFRS 18 requires an “operating profit” subtotal in published accounts and disclosure of management-defined performance measures used in public communications. See IFRS in Qatar and IFRS 18.
Net debt and debt-like items
The price for shares is usually the value of the business less what it owes. Debt-like items are obligations that behave like debt without being called a loan.
The obvious items are borrowings: bank loans and overdrafts, shareholder loans, lease liabilities and guarantees given for others. End of service gratuity is another. A worker with at least one full year of service is owed not less than three weeks’ wage for each year (Labour Law Article 54), so check that the accrual covers every employee. Tax belongs here too, meaning unpaid tax, withheld tax not yet remitted, and penalties.
Other debt-like items include overdue suppliers, customer advances for work not yet done, dividends declared but unpaid, and deferred payments for earlier acquisitions. Some cash is also not free to use, for example deposits held as security or cash in pledged accounts. How each item affects the price is a matter for the sale agreement.
Working capital: what the business needs to run
Working capital is receivables and stock less payables. A buyer needs to know the normal level across the year, because a business can look cash-rich at the moment of sale if collections are pushed and payments delayed.
In practice, the review of receivables starts from an ageing by customer and looks at overdue and disputed balances and at amounts due from related parties. Payables are reviewed through an ageing by supplier, looking for signs that suppliers were paid late before the sale. For stock, the questions are slow-moving or obsolete items and how stock was counted at the year end.
Buyers often agree a normal level in the sale agreement, based on month-by-month balances: see management accounts and monthly reporting.
Tax exposures to check
The GTA can assess tax and penalties for each year until the limits in Article 37 of the Income Tax Law expire, and it can reassess a year already assessed if new information emerges (Article 15). Any amount raised for those years can reduce the value of the company you buy.
Article 27 of the Income Tax Law also makes the transferor and the transferee jointly responsible for taxes and financial penalties due, according to the Regulations. Whether that reaches a buyer of shares for the target’s past taxes is a legal question. Check it with a lawyer before you sign, and cover past tax in the sale agreement.
| Area | What to check | Rule |
|---|---|---|
| Open years | Which years the GTA can still assess, and any assessments, objections or GTA letters | Law Arts. 15, 37 |
| Returns and accounts | Returns filed on time, with audited accounts where required | Regs Art. 33; Law Art. 24(1) |
| Withholding tax | 5% on royalties, interest, commissions and service fees paid to non-residents, remitted before the 16th of the next month | Law Art. 9(2); Regs Art. 24 |
| Missed withholding | A penalty equal to the tax not withheld, plus the tax; 2% a month for late remittance, up to the tax due | Law Art. 24(7), 24(2) |
| Transfer pricing | Arm’s length prices, documentation and any declaration due | Regs Arts. 53, 59; GTA President’s Resolution No. 4 of 2020 |
| Contract notification | Contracts notified to the GTA where required | Regs Art. 37 |
| Records | Books and documents kept for ten years after the year they relate to | Regs Art. 36 |
For the detail, see tax audits, penalties and objections, withholding tax in Qatar, transfer pricing rules in Qatar and contract notification and tax clearance. Sellers can run the same checks first: see a tax health check for SMEs.
Audit history and the reliability of the numbers
Every LLC appoints one or more auditors each year (Commercial Companies Law Article 260). Its managers prepare the balance sheet, the profit and loss account and a report within two months of the year end, and send them with the auditor’s report to the Ministry and to each partner (Article 251). Those documents are the base of the review.
Start with the opinions and management letters: whether each opinion was modified and why, and whether the points raised were fixed (see audit reports and management letters). The auditor’s report also states whether the company keeps proper accounts and records, and lists material violations of the law or the articles (Article 146). Then reconcile the two sets of figures. The management accounts for each year should agree with the audited figures, or the differences should be explained.
An auditor may not audit an entity to which it provides consultancy work (Law No. 8 of 2020, Article 27(3)). Choose a due diligence adviser that is independent of the target’s audit.
Qatari rules that shape the deal
| Rule | What it means for the buyer | Source |
|---|---|---|
| LLC share assignment | By official instrument; effective only once entered in the partners’ register and the commercial register | CCL Arts. 236, 237 |
| Partners’ right to buy first | Unless the memorandum says otherwise, other partners may buy at the real price within 30 days of notice; the auditor fixes a disputed price | CCL Art. 238 |
| Shares under enforcement | The LLC may buy an enforced share for a partner within 15 days; a JSC must refuse to register pledged or attached shares | CCL Arts. 241, 161 |
| JSC founders and articles | Founders cannot sell for two years after incorporation, with exceptions; articles may restrict trading but not prohibit it | CCL Arts. 165, 167 |
| Foreign ownership | Non-Qatari ownership above 49% needs an application and approval; some activities are closed | Law No. 1 of 2019, Arts. 2 to 4 |
| Notice to the GTA | The company notifies the GTA within 30 days of a change of ownership; for tax, the change takes effect only from notification | Regs Art. 27 |
| Seller’s capital gains tax | The seller declares and pays the tax; according to GTA guidance, a No Objection Certificate follows before the transfer is recorded | GTA guidance; Dhareeba NOC service |
For a listed company, shares transfer under the rules of the Qatar Financial Markets Authority (QFMA) and the market (Commercial Companies Law Article 161), and the QFMA’s Offering and Listing, and Mergers and Acquisitions Rules 2025 apply. No one may carry out a financial evaluation for a process related to a listed entity unless entered on the QFMA’s list of financial evaluators.
For foreign ownership, see how to set up a company in Qatar. QFC and free zone targets follow their own rules: see LLC, branch, QFC and free zone obligations.
A document request checklist
Checklist
- Audited financial statements and management letters for recent years
- Monthly management accounts and trial balances for the current year
- Aged receivables and payables, and the stock listing
- Loan, lease and guarantee agreements
- A list of related parties, with their agreements and balances
- Tax returns, assessments, GTA letters and objections
- Withholding tax statements, transfer pricing declaration, contract notifications and Dhareeba status
- Commercial register extract, memorandum of association and partners’ register
- Payroll and the end of service schedule
What to do next
Agree the scope before the work starts. Our financial due diligence service covers buyer-side financial due diligence, and our mergers and acquisitions page covers the wider deal. Legal due diligence is work for your lawyers. To discuss a transaction, request a proposal.
Frequently asked questions
What is financial due diligence?
A buyer-side review of a company’s figures before a purchase or investment. It tests earnings, debt, working capital, tax and related parties, and reports the findings to the buyer. It is not an audit and gives no audit opinion.
What is a quality of earnings (QoE) review?
The part of due diligence that tests whether reported profit is real and likely to repeat, by removing one-off items and the effects of owner and related-party arrangements. “Adjusted” profit is a management measure, not a total defined by IFRS.
How far back can the GTA assess a company we buy?
Five years after the year in which the return was filed, and ten years after the tax year if no return was filed. For a company that never registered, the period runs from when the GTA discovers the activity (Income Tax Law Article 37).
Is the buyer responsible for the target’s past taxes?
Assessments for open years can reduce the value of the company you buy. Article 27 of the Income Tax Law makes the transferor and the transferee jointly responsible for taxes due; whether that covers a buyer of shares is a legal question to check with a lawyer before signing.
How are shares in a Qatari LLC transferred?
By official instrument under the memorandum, effective once entered in the partners’ register and the commercial register (Commercial Companies Law Article 237). Other partners may have a 30-day right to buy first (Article 238), and the seller’s capital gains tax must be settled.
Is due diligence different for a listed company?
Yes. Shares transfer under QFMA and market rules (Commercial Companies Law Article 161), the QFMA’s Offering and Listing, and Mergers and Acquisitions Rules 2025 apply, and financial evaluations need an evaluator on the QFMA list.
Can the company’s auditor carry out our due diligence on it?
Use an adviser independent of the target’s audit. An auditor may not audit an entity to which it provides consultancy work (Law No. 8 of 2020, Article 27(3)), so the target’s own auditor is not the natural choice for this review.
Sources
Laws and regulations
Standards, regulators and services
- IAS 24 Related Party Disclosures (IFRS Foundation)
- IFRS 18 Presentation and Disclosure in Financial Statements (IFRS Foundation)
- Registration requirements (Qatar Financial Markets Authority)
- Registered financial evaluators (Qatar Financial Markets Authority)
- No Objection Certificate for a change of owners (Dhareeba)
This article is general information, not legal, tax or investment advice for a transaction. The laws and pages cited were checked on 16 October 2026; English descriptions of Arabic legal texts are our own. Confirm share transfer and tax liability points with a lawyer before you sign.