Qatar plans to cut corporate tax to 10 percent next year, Finance Minister Youssef Kamal said on Wednesday, in a move by the country to attract foreign investors. The tax rate is currently as much as 35 percent.

The worlds biggest exporter of liquefied natural gas is spending billions of dollars to develop its non-oil economy to curb reliance on oil and gas income, which makes up over 60 percent of gross domestic product.

"There is a tax bill about to be issued that would bring down the tax to 10 percent. It would be implemented as of 2010," Kamal told a conference in remarks broadcast by Al Jazeera television.

"(It) can be categorised as lowering barriers toward foreign investments in Qatar," Kapil Chadda, managing director and head of global banking at HSBC in Doha, said of the tax cut.

"From a macro-economic point of view, there will not be a big impact (as) only foreign companies pay local taxes not local companies," Chadda said. "The total tax revenue in Qatar is still quite modest from an overall revenue point of view."

Qatar has the worlds friendliest tax climate, according to Forbes 2009 Tax Misery & Reform Index, which evaluates policies that attract or repel capital and talent.

Qatar projects a $1.6 billion budget deficit for the fiscal year ending in March 2010. But with oil prices picking up from last Decembers low of $32 a barrel, the budget is expected to move into the black.

"There will be a significant increase in oil and gas revenues, based on new capacity coming on stream," Chadda said. "So you will probably see a much larger budget surplus next year than previous budgets."

Last month, the head of the Qatar Financial Centre Authority (QFCA) told Reuters that 10-15 global firms would soon start operations in Qatar.