DOHA: The US federal tax reform is expected to add value to Qatar’s investments in the US. Qatar has significant exposure to various asset classes, which are expected to benefit from the sweeping tax overhaul, according to Doha-based investment strategists.
The tax bill passed by republicans in the US Senate is expected to boost profits of corporate. Qatar’s sovereign wealth fund and some family businesses are largely exposed to the US investment industry. Back in 2015, Qatar Investment Authority (QIA) had committed $45bn investment in the US. Recently, QIA announced that it had deployed more than 50 percent of its committed fund.
In the real estate sector, QIA has prioritised its investments. It has also exposure to the US industry, alternative energy and technology. According to information available on public domain, QIA has also extended its portfolio to health sector. Drug and biotechnology companies would be among those benefiting hugely from paying a reduced tax rate.
‘Qatar has significant exposure to US market, especially in the real estate and equity market. Either way both asset classes will benefit from the tax reforms. The reforms will be a boost for the equity investments and other asset classes. And this will add value to Qatari investments over there, Talal Samhouri, Head of Asset Management, Amwal told The Peninsula.
According to Bank of America Merrill Lynch Research team, of Qatar’s combined sovereign wealth fund, a significant share is in listed strategic foreign stocks. Excluding domestic assets and real estate, BofML believes that QIA’s twothirds of the portfolio could be private equity. Assets managers believe this asset class will benefit from rising equity markets, as higher prices increase the value of the holdings they manage and improve the performance of their funds. ‘The prospective headline cut to the US corporate tax rate from 35 percent to 20 percent is a positive but not as significant as it may look at first sight. Historically, the US corporate sector has enjoyed an effective tax rate closer to 25 percent due to ample scope for deductions. The US Congressional Budget Office believes that the total revenue lost from the US business taxes from the Senate tax bill would be $744bn over 10 years.
