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Onshore banking with offshore benefits

Article - November 26, 2012
The Qatar Financial Centre Authority promotes the expansion of the country’s financial services sector

The world’s most famous financial centres are well established: London, New York, Frankfurt, Singapore. Many countries are actively promoting the formation of their own financial centres, and few have been more successful than Qatar in such a short time, which passed the law setting up the Qatar Financial Centre (QFC) in 2005.

Since then, the Qatari government and the QFC have invested heavily in providing financial services companies with the most modern legal, financial and physical infrastructure possible, permitting companies to move into the region to establish themselves quickly and smoothly.

The QFC is comprised of three main parts: the QFC Authority, which is the commercial arm of the centre; an independent financial regulator, known as the QFC Regulatory Authority; and an independent judiciary made up of a Civil and Commercial Court and a Regulatory Tribunal.

The combination of physical, legal and regulatory structures set up by the QFC provides financial institutions with the vital environment they need to establish operations profitably in the Gulf Cooperation Council (GCC) region, which boasts one of the world’s fastest-growing economies and will be the destination for billions of dollars of investment in coming years.

“Those in the financial services industry like to be in close proximity to each other, but need a proper environment to thrive,” says Shashank Srivastava, Chief Executive Officer of the QFC Authority. “I believe we have created the right legal and regulatory environment that allows the companies to not only access the domestic market with their international companies but also the regional international markets.”

The QFC provides companies with an onshore trading environment with a strong legal sector based on English common law, a principles-based regulatory structure and a low tax of 10 percent on locally sourced profit. Profits can be freely remitted outside the country and the law allows 100 percent foreign ownership by foreign companies and places no restrictions on dealing in any currency.

Qatar has double-taxation agreements with more than 35 countries, providing still more benefits for companies, and their employees, that relocate to the country. Employees can also enjoy a high quality of living, with top-notch, reasonably-priced housing, affordable healthcare and many international schools.

This highly desirable offer has already attracted many well-known international financial institutions, with more than 165 licenses issued since 2005 to both local firms and companies from abroad. The list includes Allianz, AXA, Barclays Capital, Citibank, Credit Suisse, Deutsche Bank, ICBC, JP Morgan, Kane, KPMG, Marsh, Mitsui Sumitomo, Morgan Stanley, PricewaterhouseCoopers, UBS and Zurich FS.

The QFC Authority has been so successful at setting up and promoting the financial centre that it has won the Best Financial Centre in the Middle East award from Global Investor magazine, the flagship publication of the prestigious Euromoney group, in 2011 and in 2012.

“We are extremely proud to be recognised as the best financial centre in the Middle East by such a highly regarded industry publication,” says Mr Srivastava. “Winning this award for a second year in succession is welcome recognition of the progress we are continuing to make in building a world class financial centre and the leading platform to capitalise on the emerging opportunities in the Middle East.”

The QFC is also busily planning for the future. Financial centres need well established legal and regulatory frameworks to function, but they also need a large pool of talent, and the centre has already taken important steps towards providing such a group of well educated people.

The Qatar Finance and Business Academy (QFBA) was started in partnership between the QFCA and the Qatar Foundation for Education, Science and Community Development. The QFBA arranges for students to go on courses which are certified by third parties (such as the Chartered Institute of Bankers in the UK).