The nation of Qatar is a World Financial institution “high-income economic system,” backed by the world’s third-largest pure gasoline and oil reserves. It has the third-highest GDP per capita on the planet (by buying energy parity), with very excessive human improvement. Just like different Gulf Cooperation Council states — which additionally embody the United Arab Emirates, Saudi Arabia, Oman, Kuwait and Bahrain — Qatar has needed to cope with the decline in international oil and gasoline costs after they first collapsed in 2014, and the scenario has been made much more troublesome by a Saudi-led embargo of the nation that began in 2017.
As a result of Qatar has a small inhabitants, substantial monetary reserves and favorable enterprise circumstances for funding, it’s in a greater place than most to resist the stress. It has been working towards reducing its reliance on the export of oil and gasoline in favor of financial diversification. On Dec. 3, 2018, the nation moved one step nearer towards that purpose by asserting its withdrawal from the Group of Petroleum Exporting International locations with a view to focus extra on its pure gasoline export sector.
With the emergence of the COVID-19 pandemic, Qatar has additionally dedicated to a nationwide monetary know-how technique to diversify an economic system that will likely be powered by the world’s second-cheapest photo voltaic power with a view to meet its purpose of accelerating the proportion of renewable power in its whole electrical energy era to 20% by 2030.
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Yousuf Al-Jaida, CEO of the Qatar Monetary Middle, defined:
“[COVID-19 related challenges] not solely spotlight the significance of tech and fintech, but additionally accelerates adoption and improvement. We are going to proceed in our efforts to complement and develop the tech and fintech infrastructure in Qatar as an enabling platform and stay up for seeing extra worldwide FinTechs, together with these from the US, simply combine into Qatar’s thriving ecosystem through QFC’s FinTech license and wide selection of advantages.”
The QFC has reported it grew by 35% in 2019, and based on its web site, it now has over 900 shoppers from varied sectors, each monetary and non-financial.
Nationwide fintech technique
Qatar is a number one monetary hub within the Center East. It has been weaving Shariah-compliant blockchain know-how into its current monetary and authorized infrastructure by the sector’s emphasis on digital funds with Qpay, Qatar’s largest fintech firm, in addition to cash administration and lending, amongst others, to emerge as a regional fintech hub.
The fintech sector noticed international funding develop from $50 billion in 2017 to $111.eight billion by the tip of 2018, based on Huge 4 audit agency KPMG. In 2019, to draw international fintech funding and encourage giant corporations to launch subsidiaries within the nation, Qatar established the Funding Promotion Company, which launched “free zone” incentive applications. Qatar’s sovereign wealth fund has additionally frequently elevated its investments in tech and fintech corporations and in know-how funding funds.
The continuing coronavirus pandemic has introduced dramatic modifications to the world, forcing governments throughout the globe to make bringing blockchain tech to their monetary providers a precedence. This consists of Qatar, which has developed a nationwide fintech technique set forth by the Qatar Central Financial institution, or QCB, which goals to assist the fintech sector in partnership with a number of key native stakeholders together with the QFC and Qatar Improvement Financial institution, or QDB, because the Qatari public sector goals to be the largest spender on blockchain know-how by 2021.
As a part of its fintech technique, the QCB is weighing issuing a central financial institution digital forex, as COVID-19 has led to an elevated curiosity in digital currencies around the globe. “The QCB significantly welcomes the protected use of technological developments that promote monetary stability and inclusion in Qatar,” stated a consultant from the QCB’s fintech part. “Issuing a CBDC actually has its advantages in innovation and enabling customers to considerably change the best way they make funds.” The consultant added:
“There may be at the moment no definitive plan to situation CBDC, nevertheless, the QCB is assessing the alternatives that this know-how presents for Qatar and can proceed to analysis the matter earlier than making a closing resolution.”
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In March, the QCB launched its nationwide QR-code-based “Qatar Cellular Fee System,” a venture designed to extend monetary inclusion and scale back using banknotes within the nation. Its purpose is to allow residents to make use of an digital pockets on their cell phones, full peer-to-peer transactions, and pay for items and providers. It additionally permits for instantaneous withdrawals and money deposits.
“Qatar has demonstrated an unimaginable synergy amongst entities within the pursuit of turning into a worldwide chief in FinTech,” stated Mohammed Barakat, managing director of the U.S.–Qatar Enterprise Council. He additionally added:
“Contemplating Qatar’s already current giant fee processing and remittance market and its technique to develop into a regional gateway for an enormous surrounding market, I foresee fast progress in Qatar’s FinTech sector.”
With Qatar’s border reopened to pick flights from low-risk international locations on Aug. 1, the QDB just lately launched a fintech incubator (for early-stage start-ups) and an accelerator program (for mature corporations) that can cater to native and international entrepreneurs. In an try to assist the fintech neighborhood community and collaborate, the QFC is providing “FinTech Circle,” a coworking area the place qualifying fintech corporations can work without spending a dime for 12 months. The QFC — which claims to have over 900 companies as shoppers and $20 billion in mixed whole belongings underneath administration — operates its personal authorized, regulatory and tax infrastructure.
“From Fintech’s early emergence as a challenger to a traditional monetary providers sector to its position as we speak as a change catalyst and enabler, it’s protected to say that our business has come a good distance,” defined Abdulaziz bin Nasser al-Khalifa, CEO of the QDB. ”Blockchain is following go well with, with 10% of world GDP anticipated to be saved on blockchain by 2027.” He additionally added:
“In Qatar, blockchain and different rising applied sciences can play a significant position in Qatar’s total financial transformation, particularly within the digitisation of varied sectors, the place they are often utilized in 4 key areas: authorities to citizen, enterprise to client, authorities to enterprise, and enterprise to enterprise.”
Combating cryptocurrency cash laundering and terrorist financing
Qatar has joined plenty of international locations throughout the globe which can be implementing stricter legal guidelines to fight the illicit use of cryptocurrencies in terrorist financing and cash laundering.
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In December 2019, the QCB adopted new rules in type of Circulars 19, 21, 23 and 46 of 2019, which prohibit digital asset suppliers providers, or VASPs, from working in Qatar with a view to fight cash laundering and terrorist financing, bringing its laws according to Monetary Motion Process Drive suggestions, which embody adopting a risk-based method to Anti-Cash Laundering and Combatting the Financing of Terrorism and to hold out danger assessments. The laws established penalties for violating the legislation within the type of monetary sanctions and attainable imprisonment, and it requires complete cooperation from worldwide companions akin to the USA, China, India, Australia, Bangladesh, Malta, Pakistan and extra.
Following Qatar’s AML regulatory updates, the Qatar Monetary Markets Authority, or QFMA, and the Qatar Monetary Middle Regulatory Authority, or QFCRA, additionally issued comparable notices in December 2019 requiring all providers involving cryptocurrencies to be banned all through the QFC till additional discover as a reminder that VASPs usually are not included throughout the scope of the QFCRA and QFMA licenses, and that any agency appearing as a VASP is working outdoors the scope of its license.
For the needs of the QCB circulars and the QFMA and QFCRA notices, the QFCRA defines digital asset providers broadly because the change between digital belongings and fiat currencies; change between a number of types of digital belongings; switch of digital belongings; safekeeping and/or administration of digital belongings or devices enabling management over digital belongings; and participation in and provision of economic providers associated to an issuer’s supply and/or sale of a digital asset. Nevertheless, safety tokens or different digital monetary or financial devices which can be regulated by the QFCRA, the QCB or the QFMA usually are not included within the ban.
For instance, based on the QCB consultant, cryptocurrency debit playing cards can’t be issued by monetary providers suppliers in Qatar. A cryptocurrency debit card operates in a largely comparable method to another standard pay as you go debit card, however as a substitute of topping up the cardboard up from an bizarre checking account, funds are transferred from a cryptocurrency pockets. The cardboard supplier then mechanically converts the cryptocurrency to the fiat forex of alternative.
Wirecard, the main European fintech cryptocurrency debit card supplier — which on the finish of June imploded into the area’s largest company accounting scandal by declaring chapter because of accounting manipulations and worldwide cash laundering allegations — has been offering fee processing providers to Qatar Airways since 2013. Such preparations of transferring cryptocurrency from a pockets and conversion to fiat forex are not permitted in Qatar underneath the brand new cryptocurrency rules.
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Because the consultant from QCB’s fintech part acknowledged:
“Qatar is at the moment assessing the advantages and dangers related to digital belongings and issues such because the taxation of digital belongings will type a part of that evaluation.”
Fahad Al Dosari, Qatar’s industrial attache to the U.S., added that “Qatar is among the most steady economies on the planet, and we provide sturdy monetary incentives for US-based corporations, like our 20-year tax holidays for corporations working in Free Zones.” He additionally added:
“Below the management of His Highness the Emir Sheikh Tamim bin Hamad Al Thani, all of Qatar’s authorities businesses are dedicated to supporting US funding within the area and making Qatar a fintech hub for the Center East.”
It must be famous that the U.S. and Qatar should not have a double taxation settlement, however each international locations signed an settlement to enhance worldwide tax compliance and to implement the Overseas Account Tax Compliance Act.
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Moreover, the U.S. is a detailed protection and safety ally of Qatar, and in 2018, the 2 nations signed a memorandum of understanding relating to the combat in opposition to terrorism and its financing and relating to combating cybercrime.
“Terrorist networks have tailored to know-how, conducting advanced monetary transactions within the digital world, together with by cryptocurrencies. IRS-CI particular brokers within the DC cybercrimes unit work diligently to unravel these monetary networks,” identified U.S. Treasury Secretary Steven Mnuchin after the Division of Justice introduced the biggest ever seizure of cryptocurrency belongings utilized by terrorist organizations, following a multiagency investigation performed by the Federal Bureau of Investigation, Immigration and Customs Enforcement’s Homeland Safety Investigations division, and the IRS’ Felony Investigation division. The investigation utilized Chainalysis’ crypto investigative instruments.
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U.S. taxpayers and their associated corporations which have “operations” in Qatar should file IRS tax Type 5713 with their earnings tax returns with a view to keep away from punitive penalties.
The views, ideas and opinions expressed listed here are the writer’s alone and don’t essentially replicate or characterize the views and opinions of Cointelegraph.
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