Article 107 of Constitution of 2003 gives Qatar’s Advisory Council the right to review the draft budget, which it is to receive at least two months before the beginning of the fiscal year. The council has the right to amend the draft after the approval of the government. If the new budget is not approved before the beginning of the fiscal year, the previous budget provisions shall continue until the approval of the new one. Past budgets have not fully reflected significant state expenditure in strategic sectors.
The government does not impose income taxes on individuals, and the top corporate tax rate is 35 percent. Oil and gas provided over 60 per cent of government revenues in 2004-2005, and investments covered an additional 30 per cent. The government has taken advantage of budget surpluses caused by high oil and gas revenues to reduce its sovereign debt.
The Audit Office of the State of Qatar is an independent legal entity, created by Law No. 5 of 1975 and redefined by Law No. 4 of 1995, amended by Law No. 12 of 1999. Directly answerable to the Head of State, the Audit Office monitors the expenditures of all government agencies and companies at least 51% of which are state owned.
Government procurement regulations provide a ten percent preference for Qatari bidders and five percent for GCC bidders. The Central Tenders Committee (CTC) of the Ministry of Finance is responsible for processing the majority of public sector tenders, but foreign companies have complained about a lack of transparency. Important government contracts require Qatari intermediaries with good access.
The Qatar Central Bank (QCB) was originally established as the Qatari Monetary Authority under Law No. 14 in 1973. In 1993, the title was changed to the Qatar Central Bank. Among its many tasks is its stated mission to promote good corporate governance and transparency in the financial sector.
Eight local and six foreign banks operate in Qatar. The local banks include two Islamic banks. The Central Bank also lists and regulates three investment companies and one development bank, the Qatar Industrial Development Bank. In addition to banks and insurance companies, the QCB regulates investment funds. It issued Circular No 18 of 2006 requiring those funds operating in Qatar to issue annual financial statements.
The Central Bank plays a leading role in implementing Law No. 28 of 2002 and Decree Law No. 21 of May 11, 2003, combating money laundering, and Law No. 3 of 2004 combating terrorism. The deputy governor of the QCB chairs the National Anti- Money Laundering and Combating Terrorism Financing Committee established by the legislation. Qatar is also a founding member of the Middle East and North Africa Financial Action Task Force (MENAFATF) established in 2004.
The government has announced plans to set up a holding company for privatization to help speed up the process of selling stakes in state-owned ventures. The company will be a public-private partnership whose shares will be offered to investors through an initial public offering (IPO). It will buy stakes in companies identified for privatization, as well as putting equity into new ventures.
The Doha Securities Market (DSM), established by Decree Law 14 of 1995 and opened on May 26, 1997, is managed by an independent government body. The DSM started with 17 companies listed on the exchange, with an estimated capitalization of $1.6 billion.
Thirty-two companies were listed at the end of 2005 with a market capitalization of 317 billion Qatari Riyals ($87 billion). As market prices soared, the turnover ratio of traded stock more than doubled to about 33 per cent in 2005.
A central electronic registration system was established in 2002 for share registration and transfers, and live feeds are available on DSM’s website. GCC nationals can own up to 25% of the shares of any traded company. On January 14, 2005, a law was passed by Qatar's government allowing foreign investors to trade in Doha stock market on condition that their ownership does not exceed 25% of any traded stock. Foreign investors will enjoy all rights enjoyed by Qatari nationals with regard to membership of boards of directors of companies, among other things.
The Qatar Bank Training Institute, established in 1996, has a board of trustees chaired by the governor of the Qatar Central Bank and including the directors of the major banks that support its budget.
International Transparency Standards
Qatar is the third member of the GCC, following Kuwait and Oman, to join the International Monetary Fund's General Data Dissemination System (GDDS). It began participating on December 30, 2005, “marking a major step forward,” as the IMF observed, “in the development of the country's statistical system.”
Both Moody’s and Standard and Poor’s have rated the country.