BY Satish Kanady
DOHA: Qatari investors, particularly individual investors, buying businesses in foreign lands must weigh the underlying tax risks well before they strike the deals. International taxes are more developed, sometimes complex, in some of the most preferred destinations of Qatari investors, a top Tax Risk expert has cautioned.
Talking to The Peninsula, Neil O’Brien (pictured), Tax Partner, PricewaterhouseCoopers Doha said: “Qatar is aggressively expanding its businesses to outside. The country does not have a long history of buying international businesses. The investors need to know what they should generally buy and how deeper these assets are being exposed to the tax regimes of the respective countries”. Without understanding the tax risk exposures, investors will not be able to assess the expected returns from investments, he said.
The uncertainty of the tax outcome on investments in the global environment has increased dramatically. Qatari investors are currently experiencing some of the complexity of investing in global environment. The investors must wake up to the very real risk.
Qatari companies are making huge investments in foreign lands and they are facing issues in various ways. Some are deciding to make investment platforms in countries like Singapore, Mauritius and other territories. A close understanding of the tax regimes of the respective countries will help Qataris to avoid any possible “Vodafone India” situation in which the telecom major is waging a multi-billion tax dispute.
Neil noted countries like Brazil have got 50 different taxes. So in that form, managing the tax risk of while buying businesses in a country like Brazil, one has to really understand what all these fifty taxes are meant for doing business in Brazil. The scenario of dealing with such a complex tax regime will be a massive surprise to Qatari investors.
Tax has emerged as one of the top five issues in making an investment in the developed economies. The globalization of investors, changing risk appetite, government influence on long and short-term tax policies are three key factors that have contributed most to the rise of tax in deals. Qatari investors are currently experiencing to varying degrees of all three of these factors and as a consequence the focus on tax in deals has been rising, he noted.
On the inbound foreign investment, Neil said the risks are minimal and the tax structures are not as complex as other parts of the world. The amount of taxes is also less significant in Qatar as well as in other GCC countries, compared to the US and Europe.