Summary of Hypothetical Business Plan in Qatar

Introduction

This business project to be introduced in Qatar is opening a fast food restaurant which meets the demands of the Qatari population. The total investment for this business project is 250 million Qatari Riyal. In the establishment of a business in Qatar, this paper chooses the approach of a limited liability company which is the mostly used approach. In this case, the business enterprise must not exceed a total of 49% of the capital. Qatari law allows foreign business to earn approximately 80% of the profits of the company. Qatari is not a zone which is free of taxes. In Qatar, there is no taxing of personal income but as a Foreign Company which seeks to carry out business in the country, this business will pay taxes on corporate income. The rate of taxes is at 0% on amounts which are less than QR100, 000 and upto 35% for amounts which exceed QR 5 million. This means that this business will be taxed a corporate tax of 35% of QR 250 million. This is a total amount of QR 8,750, 000. Depending on the activities of the company, there are exceptions to specific taxes. The exceptions are for activities which benefit Qatar directly, fulfill the Qatari government's strategic goals and uses modern technology. Apparently this business enterprise meets all these goals, meaning that it meets every goal and it qualifies for tax exemptions. For goods shipped into Qatar, original documentation copies are produced. Every good entering into Qatar must be accompanied by packing lists, commercial invoices, and certificates of origin and shipping documents.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

This business venture is to begin in 2017 and last for a period of 8 years. Projected revenue is the approximated finances which an organization generates in a given period. These projections happen quarterly, annually or monthly in the accounting periods. This business project projects revenue through the combination of internal knowledge and research. Sales revenue can also be used to refer to the amount of finances which come from the sales of given products. Sales revenues are generated from the operating activities of the restaurant. Revenue is the account found in the income statements of the company. With the high gross domestic product and fast growing population, Qatar is a very profitable area to start a business. Selection of the correct Qatari partner is important for the success of the business and the partner is in the form of an individual or a company that is fully owned by another business in Qatar. The presence of a partner in Qatari is a robust and secure solution for this foreign company. Incase this business will fail, there is individual risks to the owner because financial and debt irregularities are regarded as serious offences. Risks are greater if there are loans from Qatar based banks. It is also a necessity for any business in Qatar to have 12 month lease on office space. This will help the company in obtaining trade license. Given the high office space price in Qatar, it is the largest cost for a business which is established in Qatar.

PayBack Period

The payback period refers to the amount of time which is needed for the recovery of the investment costs. It is a major determinant of undertaking a project provided they are not desirable for positions of investment. Before starting an analysis of the project, the managers must realize that it has even and uneven cash flows, and the company uses the one which is best for the calculation of the cash flows. Even cash flows are investments which produce the products of an organization effectively and brings in the same level of income on a monthly basis depending on the production of the item by the company. Therefore, payback period equals the cost of investment divided by the annual net cash flow.

Discounted PayBack Period

The discounted payback period refers to the procedure in capital budgeting which used in the determination of how much profitable a project is. A discounted payback period provides the years which it takes a company to break even from using the first expenditure. The future cash flows are discounted and the time value of money is recognized. The aspect of net present value is not in existence and this provides the inflow of future cash not being discounted. In the calculation of the discounted payback, the cash flow in the project has to be estimated and analyzed into periods. After this, the cash flows are reduced by the factor of their present value in order to show the discounting. Future discounted flows refers to net against the initial outflow. The period of discounted payback is calculated when there is equality of the outflows and the inflows.

Net Present Value

Net present value refers to the differences between the present values of cash inflows and outflows over a given period of time. It is used in capital budgeting in analyzing profitability of a projected investment. Positive net present value shows that the earnings of the project have been generated by investment exceed the costs which are anticipated. An investment having a positive NPV is profitable.

NPV = C x {(1 - (1 + R)-T) / R} Initial Investment

Where

Ct = net cash inflow during the period t

Co = total initial investment costs

r = discount rate, and

t = number of time periods

Internal Rate of Return

It is used in capital budgeting for the estimation of the potential investments profitability. It is a discount which makes the net present value of every cash flow from the given project to be zero. It has the same formula for calculations as the net present value. The higher the internal rate of return of a project, the more it becomes desirable to undertake.

Conclusion

From the above information and results obtained from the calculations, this project is very much feasible and should be proceeded with. This is a project that will realize the company much profits. Qatar does not have many regulations in matters related to taxes and this makes the country even a better place for the business to flourish. An investment having a positive NPV is profitable. Also, the higher the internal rate of return of a project, the more it becomes desirable to undertake. Projected revenue is the approximated finances which an organization generates in a given period will be considerably high. The restaurant should be established because of the guarantee of success which will come with it. The basics for the establishment of any business in Qatar have been assessed.