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Taxable profit in Qatar starts from the accounting profit, but it is rarely the same figure. Some expenses in the accounts are not deductible at all, some are capped, and depreciation is allowed only up to the maximum rates set in the Executive Regulations.
The Dhareeba return asks for these adjustments line by line, and the audited accounts must be reconciled to taxable income in a schedule. Getting them wrong can lead to an amended assessment years later.
This guide sets out the tests every deductible expense must pass, the items that are never deductible, the limits, bad debts and provisions, tax losses and the depreciation rules, with the article behind each rule.
- Tax rate
- 10% of taxable income
- Loss carry-forward
- 5 years
- Small assets
- Up to QAR 5,000
- Law checked
- 16 October 2026
The short answer
In short
- An expense is deductible only if it is necessary to earn taxable income, actually incurred and documented, not capital in nature, and related to the tax year (Income Tax Law Article 7).
- Some items are never deductible, such as fines, income tax and the salaries of owners and their families (Law Article 8; Regulations Articles 9 and 11).
- Others are capped: entertainment at 2% of net income or QAR 500,000, whichever is higher; donations at 3%; related-party interest at loans of three times equity (Regulations Articles 8 and 10).
- Depreciation follows the accounts but may not exceed the maximum rates in the Regulations, and tax losses can be carried forward for five years (Regulations Articles 16 and 5(4)).
From accounting profit to taxable income
Taxable income is gross income less allowable deductions and losses, taxed at 10% (Income Tax Law Articles 7 and 9). Income is recognised on the accrual basis under the accounting standards applied in Qatar. A business with gross income of no more than QAR 1,000,000 in the previous period may ask to use the cash basis; no reply within 60 days counts as rejection (Law Article 6; Regulations Article 4).
The Dhareeba return works from the accounts: revenues less expenses, less exempt revenues, plus adjustments and non-deductible expenses. Companies attaching audited accounts include a reconciliation from accounting profit to taxable income and a depreciation schedule (Regulations Article 34(2)). For the filing steps and deadlines, see how to file a corporate income tax return.
The four tests every deductible expense must pass
Income Tax Law Article 7 and Executive Regulations Article 5(3) set four conditions:
- 1
Necessary to earn gross income
Personal costs and costs that belong to another taxpayer do not qualify.
- 2
Actually incurred and documented
Supported by documents, especially contracts, invoices and receipts, and recorded in the accounts. Depreciation and provisions meet this test if they are recorded with support.
- 3
Not capital in nature
An expense that increases the value of a fixed asset is capitalised and depreciated, not deducted at once.
- 4
Related to the tax year
The cost must relate to the tax year for which the return is filed.
Costs of earning exempt income are not deductible (Law Article 8(1)). Where income is partly exempt, costs are limited to the taxable share, calculated as taxable revenue divided by total revenue if no precise data exists (Regulations Article 6). Records must be kept for 10 years (Regulations Article 36); see bookkeeping for SMEs in Qatar.
Expenses that are never deductible
| Expense | Rule | Source |
|---|---|---|
| Payments in breach of Qatari law | Not deductible | Law Art. 8(2) |
| Fines and penalties | Not deductible | Law Art. 8(3) |
| Costs covered by compensation not included in income | Not deductible | Law Art. 8(4) |
| Salaries and benefits of the owner, spouse and children, partners in general and limited partnerships, and a majority-owner LLC manager | Not deductible | Law Art. 8(6) |
| Board members’ pay | Not deductible, except their salaries as employees | Regs Art. 9 |
| Income tax in Qatar, taxes borne outside Qatar, tax borne for a non-resident | Not deductible | Regs Art. 11 |
| Indirect taxes deductible or refundable under their own law | Not deductible | Regs Art. 11 |
| Branch payments to head office as royalties, fees, commissions or interest | Not deductible, except for banks | Regs Art. 7(3) |
Foreign taxes are a common error in generic guides: in Qatar, taxes borne outside Qatar are not a deductible expense.
Expenses with limits
| Expense | Limit | Source |
|---|---|---|
| Entertainment, hospitality, restaurant meals, holidays, club memberships and client gifts | 2% of net income before this deduction, or QAR 500,000, whichever is higher | Law Art. 8(5); Regs Art. 8(1) |
| The same costs incurred outside Qatar | Up to QAR 500,000 | Regs Art. 8(1) |
| Donations, grants and subscriptions to charitable activities or a licensed non-profit entity in Qatar, including Zakat | 3% of net income before this deduction | Regs Art. 8(2) |
| Interest paid to related parties | Only on loans up to three times equity, with an agreement stating term and purpose | Regs Art. 10 |
| Commissions paid by foreign companies to their local agents | 3% of actual total revenue of the activity | Law Art. 8(8); Regs Art. 20 |
| Free professions | Option to deduct 30% of total income instead of actual costs | Regs Art. 19 |
Related-party interest is also a transfer pricing question; see transfer pricing rules in Qatar and our transfer pricing service.
Branches: head office charges
Since Cabinet Decision No. 3 of 2023, a branch deducts the expenses incurred for its activity, including executive and general administrative expenses incurred in Qatar or elsewhere. Amounts paid to head office as royalties, fees, commissions, management charges or interest, other than actual reimbursement of expenses, are not deductible, except for banks (Regulations Article 7(3)). The 2024 Regulations set no percentage limit; older guides quoting one predate the change.
Head office administrative and general expenses under Article 7 are not subject to withholding tax (Regulations Article 21(1)). See running a branch of a foreign company in Qatar, withholding tax in Qatar and our page on foreign company branches.
Bad debts and provisions
A bad debt is deductible only if all of these conditions are met (Executive Regulations Article 12):
Bad debt conditions
- The debt was previously included in taxable income
- At least 24 months have passed since it fell due
- An adequate provision was made for it
- Legal steps to collect it have failed
- The auditor certifies that it was written off
- A list of the debts, on the GTA form, is attached to the return
- If recovered later, the amount is taxable again
Only certain provisions are deductible: doubtful-debt provisions of banks and financing companies within Qatar Central Bank limits, and insurers’ provisions for current risks and unsettled claims (Regulations Article 13). Because the article lists only these, our reading is that other companies’ general provisions, such as a trading company’s expected credit loss provision, are not deductible. For the auditor’s role, see is an audit mandatory in Qatar.
Tax losses: the five-year rule
A tax loss can be carried forward and set against taxable income for no more than five years after the end of the year in which it arose. Losses from exempt or non-taxable sources cannot be used (Income Tax Law Article 7; Executive Regulations Article 5(4)). Keep a loss schedule showing the year each loss expires.
Depreciation: which assets qualify
Under Executive Regulations Article 15, an asset is depreciable for tax if it is a fixed asset under the accounting standards, used for the taxable activity (partly used means partly deductible), declines in value with use, time or technology, and is owned by the taxpayer. Depreciation runs from the date of actual use, on the total cost of acquiring and preparing the asset. Land, goodwill and similar intangibles are not depreciable (Article 14). The accounting standards decide what is a fixed asset; see our IFRS advisory service.
Maximum depreciation rates by asset class
Depreciation follows the accounting standards but may not exceed these maximum annual rates (Executive Regulations Article 16(1)). Accounting depreciation above the maximum is added back.
| Asset | Maximum rate |
|---|---|
| Pre-operating expenses | 50% |
| Capitalised research and development | 20% |
| Trademarks, patents and similar | 15% |
| Durable buildings and constructions (excluding land) | 5% |
| Light prefabricated buildings | 10% |
| Roads, bridges, railways; pipelines, tanks and wharves; networks and canals | 5% |
| Pipelines and equipment inside refineries; small tanks | 10% |
| Cars, vehicles, tractors, trailers, cranes, motorcycles | 20% |
| Ships and boats; railway transport means | 10% |
| Aircraft and hovercraft | 20% |
| Computers, software and peripherals | 33.33% |
| Machinery, equipment and electrical appliances; industrial machinery; construction machinery | 20% |
| Drilling tools; elevators and escalators; office furniture and equipment | 15% |
| Air conditioners | 25% |
| Gas, electricity and water production and distribution equipment | 5% |
| Other machinery, equipment and fixtures | 15% |
| Hotels and restaurants: cooking and laundry machines | 20% |
| Glassware | 50% |
| Other tableware; furniture, furnishings and decorations | 25% |
| Pools and their complements | 15% |
Special depreciation rules
Several rules adjust the standard rates. Fixed assets costing up to QAR 5,000 may be fully depreciated in the first tax year of use (Article 16(3)), and major repairs are depreciated at the maximum rate of the asset repaired (Article 16(2)). Industrial machinery used in two shifts may use 1.5 times the maximum rate, and machinery used in three or more shifts twice the rate (Article 16(5)). Beyond that, the Minister may raise rates on a justified request, although no reply within 60 days counts as rejection (Article 17).
Leased assets and scrapped assets have their own treatment. Depreciation of finance and operating leases follows IFRS (Article 18). When assets are destroyed or decommissioned, their net book value is deductible in that year, provided it is supported by documents, and any disposal income is taxable when realised (Article 16(4)).
Before you file: a deductions checklist
- 1
Tag non-deductible accounts
Fines, income taxes, owner and board pay, payments to head office.
- 2
Compute the caps
Entertainment and donations against net income before each deduction.
- 3
Test related-party interest
Against loans of three times equity, with signed agreements.
- 4
Review bad debts and provisions
Keep the auditor’s certificate and the GTA list; add back general provisions.
- 5
Build the tax depreciation schedule
By asset class at no more than the maximum rates.
- 6
Update the loss schedule
With the expiry year of each loss.
- 7
Attach the schedules
Reconciliation, depreciation and related-party schedules go with the return.
For the deadlines in the year ahead, see the Qatar compliance calendar 2027.
What to do next
Before the year-end close, review the accounts against the tests and limits above and keep the documents together. Our corporate income tax return service helps you prepare the tax computation and schedules, and our tax advisory service includes a tax health check of deductions before you file. To discuss your company, request a proposal.
Frequently asked questions
Can I deduct entertainment and client gifts in Qatar?
Yes, up to 2% of net income before this deduction or QAR 500,000, whichever is higher. Such costs incurred outside Qatar are capped at QAR 500,000 (Income Tax Law Article 8(5); Executive Regulations Article 8(1)).
Are donations and Zakat deductible?
Donations, grants and subscriptions to charitable activities or a licensed non-profit entity in Qatar are deductible up to 3% of net income before this deduction. Zakat paid is treated as a donation (Executive Regulations Article 8(2)).
How long can tax losses be carried forward?
For no more than five years after the end of the year in which the loss arose. Losses from exempt or non-taxable sources cannot be used (Executive Regulations Article 5(4)).
What depreciation rate applies to computers, vehicles and buildings?
The maximum annual rates are 33.33% for computers and software, 20% for cars and vehicles and 5% for durable buildings, excluding land (Executive Regulations Article 16). These are maximums, not fixed rates.
Can small assets be written off at once?
Yes. Fixed assets costing up to QAR 5,000 may be fully depreciated in the first tax year in which they are used (Executive Regulations Article 16(3)).
When can a bad debt be deducted?
Only when all the Article 12 conditions are met: the debt was taxed before, at least 24 months have passed since it fell due, a provision was made, collection failed, the auditor certifies the write-off and the GTA list is attached.
Can a branch deduct head office charges?
Real expenses of its activity, including executive and general administrative costs, are deductible. Royalties, fees, commissions, management charges and interest paid to head office are not, except for banks (Executive Regulations Article 7(3)).
Sources
Laws and regulations
This article is general information, not tax advice for your company. The Income Tax Law and Executive Regulations cited were checked on 16 October 2026 in the GTA’s 2024 English edition; English descriptions of Arabic legal texts are our own, and the Arabic text prevails. Entities in the Qatar Financial Centre follow the QFC Tax Regulations.