Qatar's tax cuts are a smart move
The country will lose revenue in the short term, but gain far more in the long run
In a bold move Qatar has issued a law that is likely to see corporate taxes cut to a flat 10 per cent of profits for foreign companies, from next year.
The move is likely to attract more foreign direct investment and encourage international companies to set up shop in the country. Even if Qatar loses revenue from corporate taxes at first, over the long term it is likely to generate more income if it succeeds in attracting a greater number of foreign businesses.
In any event, the country has continued to experience exceptionally strong economic growth throughout the global downturn because of its gas exports.
Foreign investment is essential for developing countries because not only does it provide capital, but it also transfers technology and skills to the local economy. By using the fiscal space it has now to diversify its economy and become an investment destination, Qatar is securing its future.
