Qatar

Transfer Pricing Solutions and Rules - Qatar

In November 2017, Qatar joined the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on base erosion and profit shifting (BEPS), which was established to allow interested countries and jurisdictions to participate in the development of standards on BEPS-related issues.

In 2018, Qatar introduced country-by-country reporting (CbCR) rules, to meet one of the minimum standards for members of the Inclusive Framework. On 13 December 2018, Law No. 24 of 2018 was issued to promulgate a new income tax law. The new law replaces Law No. 21 of 2009 and is effective from 14 December 2018.

On 11 December 2019, Qatar’s General Tax Authority (GTA) published Executive Regulations (ER) relating to the implementation of Income Tax Law No. 24 of 2018 (Income Tax Law) which included transfer pricing provisions. The ER established TP compliance and documentation requirements for entities in Qatar but required confirmation on threshold and submission deadlines. The Decision requires taxpayers to comply for years starting on or after 1 January 2020.

Transfer Pricing Methods

Entities resident in Qatar, and foreign entities with a permanent establishment in Qatar, are required to submit a TP declaration form through the GTA’s online Dhareeba system with their tax return if the value of their total revenue or assets exceeds QAR10m for the income year.

In addition, an entity whose total revenue or assets exceeds QAR50m for the income year and that has at least one group member outside Qatar must submit TP Master and Local files to the GTA by 30 June for the standard reporting year.

Transfer pricing methods

The approved method of transfer pricing in Qatar is Comparable Uncontrolled Price Method.

For application of any other pricing method, prior approval must be obtained from the General Tax Authority

Local file

Resident entities and permanent establishments in Qatar are required to submit Local file on the Dhareeba portal.
The contents of the Local file are in line with the OECD recommendations. The Local File must contain detailed information on all of the controlled transactions of the taxpayer. It can be prepared in English. The required information is specified in article 10 of Decision No. 4 of 2020.

Master file

Resident entities and permanent establishments in Qatar are required to file Master file to the GTA. The requirement to file the Master File is triggered on the GTA’s Dhareeba portal for tax returns when a taxpayer meets the stipulated threshold of revenue/assets and selects that it has engaged in transactions with related parties abroad.
The contents of the Master file are in line with the OECD recommendations.
In the event that the Qatar taxpayer is a subsidiary of a non-Qatar entity, the Qatar taxpayer needs to obtain a copy of the group’s Master File from the non-Qatar head office and realign it with the format prescribed as Dhareeba system.

Country by Country Report

- The CbC reporting/notification rules apply to ultimate parent entities resident in Qatar of a multinational enterprise (MNE) group with consolidated revenues of at least QAR 3 billion in the preceding financial year (ie FY 2017 for FY 2018 CbC reporting purposes).
- An entity that is resident in Qatar for tax purposes and that is part of an MNE group whose ultimate parent entity is not resident in Qatar is not required to file a CbC report or a CbC notification in Qatar.
- Transfer pricing documentation should be maintained by all the resident entities having transaction with related entities.

Compliances to be done by the reporting entity

Every related entity shall provide the Authority with the information necessary for determining and assessing the relevant transfer pricing risks and auditing his transfer pricing practices.
o For the purpose of tax calculation, Article (53) of the ER requires the reporting entity to –
determine the prices of transactions with its related entities, according to the arm’s length pricing method, based on the information reasonably available to such entity and
o assess such prices at the time of the transaction and, in any event, no later than the date set for filing the tax return (i.e. 30th April of next year) for the tax period in which such transaction is made
o As per Article (55), for applying the arm’s length pricing method, each reporting entity should update on a yearly basis, the financial data of comparable transactions between
o such entity and an independent entity or
o between two independent entities
o Article (55) also requires the reporting entity to perform a new search for comparable transactions in financial databases every 3 years, if and to the extent that the activity’s circumstances remain unchanged.
o As per Article (60), GTA may request the reporting entity to provide all information and documents in its possession and required for auditing its transfer pricing practices with respect to its transactions with related entities within (30) thirty days from the date when such request is made.
o The Authority may provide such entity with a transfer pricing questionnaire addressing areas determined by the Authority on the form prepared by the Authority to this end.
o The related entity of the reporting entity is also required to submit, together with its tax return, a declaration of transfer pricing using the form prepared by the GTA for this purpose, if its total income or total assets as shown in the balance sheet equal or exceed the amount prescribed by the GTA.
o The GTA may request the related entity, during the process of tax examination, to complement the information provided on the transfer pricing declaration or questionnaire with additional information and instruments.

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