Qatar Implements Income Inclusion Rule (IIR) and Domestic Minimum Top-up Tax (DMTT)

Qatar has implemented OECD Pillar Two measures, introducing the IIR and a qualified DMTT from FY2025, to ensure multinational groups pay a minimum 15 percent effective tax rate. In parallel, its extended Financial Penalty Exemption Initiative strengthens voluntary compliance and supports taxpayers through full penalty waivers until December 31, 2025.

Qatar has enacted OECD Pillar Two rules introducing an Income Inclusion Rule (IIR) and a Domestic Minimum Top-up Tax (DMTT) for fiscal years starting on or after January 1, 2025. The measures ensure in-scope multinational enterprise (MNE) groups pay at least a 15 percent effective tax rate (ETR) on Qatar profits, aligning with the OECD/G20 Global Anti-Base Erosion (GloBE) framework. Notably, the legislation does not include the Undertaxed Payments Rule (UTPR) at this stage.

On March 27, 2025, Law No. 22 of 2024 was published in Qatar’s Official Gazette, amending the Income Tax Law to implement the IIR and DMTT (intended to be Qualified DMTT or QDMTT). Prior GTA communications in late 2024 had already signaled readiness for Pillar Two roll-out.

Scope and implementation

Scope

MNE groups with consolidated annual revenue of at least €750 million in two of the four preceding fiscal years, based on the ultimate parent entity’s consolidated financial statements.

Domestic architecture:

• IIR: Applies at the level of the Qatari parent entity to pick up low-taxed income of foreign subsidiaries.
• DMTT (QDMTT-intended): Levied in Qatar to bring the jurisdictional ETR on Qatar profits up to 15 percent, ensuring any residual “top-up” is collected in Qatar rather than ceded to other countries’ IIRs.

Effective date: The IIR and DMTT apply for fiscal years beginning on or after January 1, 2025.

Position on Undertaxed Payments Rule

Qatar’s law does not currently adopt the UTPR. This reduces exposure for inbound groups to an additional backstop levy, though UTPR risks could still arise outside Qatar if other jurisdictions apply it.

Related Services

Have a question? Contact our Tax Team ⟶

The DMTT is designed to be qualified under OECD criteria, meaning other countries should defer to Qatar’s top-up on Qatar profits when assessing their own IIR/UTPR computations. This design helps retain taxing rights domestically.

Qatar’s measures reference the OECD Model Rules, Commentary, and Administrative Guidance, ensuring alignment with evolving GloBE standards, including safe harbors and substance-based carve-outs.

Computation and compliance

Jurisdictional ETR and top-up calculation: If the ETR for Qatar profits falls below 15 percent, a top-up tax is calculated after applying substance-based income exclusions and safe harbors where applicable. The DMTT will collect this top-up domestically.

Compliance timelines: Local DMTT and group IIR filings will align with OECD GloBE Information Return (GIR) timelines – 15 months after year-end (18 months for the first transition year). The General Tax Authority (GTA) will issue detailed procedural guidance via the Dhareeba platform, covering notifications, return submissions, and payment processing.

Action point: Build a GloBE data model now – mapping accounts to GloBE income/taxes, deferred tax, and substance metrics – to prepare for FY2025 computations.

Penalties for non-compliance

The legislation introduces a comprehensive penalty framework to ensure timely compliance with the IIR and DMTT requirements.

• Late filing of returns: A delay in submitting either the IIR or DMTT return attracts a penalty of QAR 500 (approximately US$137.33) per day, capped at QAR 180,000 (approximately US$49,438).
• Late payment of top-up tax: Failure to pay the top-up tax on time triggers a 2 percent monthly penalty, calculated on the unpaid amount until settlement.
• Failure to register or file notifications: Entities that do not complete registration or fail to submit required notifications face a penalty of QAR 20,000 (approximately US$5,493).
• Record-keeping violations: Not maintaining or presenting relevant records may result in a penalty of QAR 30,000 (approximately US$8,239).
• Incomplete submissions: Providing incomplete information carries a penalty of up to QAR 72,000 (approximately US$19,775), calculated at QAR 200 (approximately US$54.93) for each missing document.
• Incorrect information: Submitting inaccurate or incomplete documents may incur a fine of QAR 100 (approximately US$27.47) per document, with a ceiling of QAR 10,000 (approximately US$2,746) for each registration, declaration, or notification.

Integration with Qatar’s broader tax framework

Qatar’s corporate tax regime remains unchanged. The DMTT acts as a supplementary layer, triggered only when the jurisdictional ETR falls below 15 percent. Tax incentives or rate reductions that reduce effective taxation could be offset by the DMTT.

By implementing the IIR and DMTT, Qatar ensures that any residual “top-up” is collected locally, protecting the country’s fiscal base and reinforcing its compliance alignment with global tax standards.

Financial penalty exemption initiative: Enhancing voluntary compliance

In parallel with the implementation of its Pillar Two measures, the General Tax Authority (GTA) continues to strengthen Qatar’s tax compliance environment through proactive measures such as the 100 percent Financial Penalty Exemption Initiative.

Related Services

De-Risk Your Business with Company Health Checks and Partner Reviews

In response to strong taxpayer interest, the GTA has extended the submission period for the initiative until 31 December 2025. The extension aims to provide the widest possible opportunity for taxpayers to regularize their tax status and benefit from full exemptions.

Taxpayers can apply via the Dhareeba platform, with the GTA offering comprehensive support and guidance to promote transparency and foster a culture of compliance.

So far, the initiative has achieved remarkable results:

• Over 7,000 taxpayers have benefited from financial penalty exemptions exceeding QAR 1.6 billion (US$439.451 million);
• More than QAR 56,000 (US$15,380) tax returns have been submitted, including overdue returns covering tax years from 2014 to 2024; and
• The initiative has significantly increased the overall tax compliance rate in Qatar.

Participation has been widespread across various economic sectors, enabling companies and business owners to rectify their positions and benefit from the full penalty waiver. The GTA regards the initiative as one of its landmark measures, enhancing the efficiency of the tax system and reinforcing trust and partnership between taxpayers and the Authority.

Strategic implications for multinationals

The convergence of Pillar Two implementation and voluntary compliance incentives underscores Qatar’s dual approach:

• Global alignment through the IIR and DMTT to meet OECD standards, ensuring fair taxation across jurisdictions.
• Domestic facilitation via the penalty exemption initiative, encouraging voluntary regularization and supporting a transparent, efficient tax system.

This integrated policy framework enhances Qatar’s attractiveness for multinational investors by promoting both regulatory certainty and taxpayer partnership.

Key takeaways

• FY2025 readiness: Qatar’s IIR and DMTT rules are live for fiscal years starting January 1, 2025.
• Local compliance culture: The Financial Penalty Exemption Initiative, extended to December 31, 2025, reflects Qatar’s commitment to improving voluntary compliance.
• Digital administration: The Dhareeba platform centralizes tax filings, DMTT submissions, and applications for penalty exemption.
• Strategic balance: Qatar combines OECD conformity with domestic relief measures, safeguarding its fiscal interests while supporting business continuity.

• Previous Article Kuwait’s Domestic Minimum Top-Up Tax: Scope, Compliance, and Procedures
• Next Article