By Rubeena Dina, Partner at Global Tax Services, UAE and Director at GTS Africa – Mauritius
Qatar published new transfer pricing regulations applicable from 1 January 2020, with the first returns due on 30 April for both resident companies in Qatar and permanent establishments of non-residents.
This General Tax Authority transfer pricing guidance was published in the official Gazette dated 11 December 2019, as Executive Regulations to the New Income Tax Law No 24 of 2018 via f the Decision No. 39 of 2019 of the Council of Ministers.
Qatar transfer pricing documentation requirements
Prior to the Executive Regulations, there was already the requirement for transactions between related parties to be undertaken on an arm’s length basis and in accordance with any OECD accepted pricing method.
However, there was no specific provision with regards to filing transfer pricing documentation with the Qatar General Tax Authority.
The new Executive Regulations require preparation of the local file and master file by the time of filing the tax return for the relevant period or at any other date that the General Tax Authority may specify otherwise.
It is to be noted by country-by-country reporting was already introduced in 2018 to meet one of the minimum standards for a member of the OECD Inclusive Framework.
The submission of a transfer pricing statement is required as part of the annual income tax return.
The filing requirements are applicable if a taxpayer meets the threshold on revenue or assets and one of the related parties is established outside Qatar.
In addition to the above documentation, the Qatar General Tax Authority may ask for further information on the intercompany transactions entered into by a taxpayer. The latter has 30 days from the date of the request to provide such information to the Qatar General Tax Authority.
The Executive Regulations further clarify that the local file and master file will constitute the basis for Qatar General Tax Authority transfer pricing related audits and examinations.
Updates post the publication of the Executive Regulations
The Qatar General Tax Authority has verbally confirmed that the threshold for the submission of the transfer pricing declaration with the tax return is revenue or asset value exceeds QAR 10 million (USD 2.74 million). The declaration is required to be submitted with the return using the new tax portal launched by Qatar General Tax Authority in September 2020 and called Dhareeba.
A user guide for the transfer pricing statement was released on 1 September 2020 on the tax portal.
The information required to be completed by taxpayers includes disclosure of the group activities to which the reporting entity undertakes; confirmation of any changes in activities across the group in the reporting year; information on intangibles owned by entities in the group that are used by the reporting entity; information on related party transactions undertaken by the reporting entity, including the pricing methods used; and, finally, confirmation of any changes to the group transfer pricing policy.
Final thoughts
Taxpayers need to determine whether they have entered into any related party transactions. If the answer is affirmative, they need to ensure that the transactions are at arm’s length price and comply with the documentation requirements where the threshold for revenue or asset values is met.
If transactions are not at arm’s length, the taxpayer should consider making a transfer pricing adjustment, which will affect reportable taxable profits.
The transactions likely to be scrutinized by the Qatar General Tax Authority are those involving harmful tax regimes and non-cooperative jurisdictions.
Appreciated