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Transfer Pricing in Qatar

Transfer pricing (TP) refers to the pricing arrangements between related parties. The existence of different tax rates, exemptions, and rules in different countries, offers a potential incentive to group companies to manipulate their transfer pricing to recognize lower profit in countries/companies with higher tax rates and vice-versa. This will reduce the aggregate tax payable by the group of companies and increase the post-tax profits available for distribution to shareholders. Hence, to ensure fair share of tax revenue for each jurisdiction, taxpayers are required to comply with transfer pricing provisions.

In accordance with Income Tax Law, if one or more related parties of Qatari company are established outside the state of Qatar and if such Qatari company meets the threshold (to be established by GTA on total revenue or asset of the taxpayer), is obliged by law to comply with four tier documentation requirements : (i) TP disclosure form , (ii) Masterfile, (iii) Local file and (iv) Country by Country Reporting.

The Local File and Master File shall be prepared in accordance with the OECD guidelines as GTA has not specified any format/template for this purpose. TP disclosure form is to be submitted along with the Income Tax Return whereas the Master file and Local file are to be submitted at the time of filing Income Tax return or at a later date as may be specified by the GTA. The local file details the transactions undertaken between related parties as ascertained by the Arm’s Length principle, primarily based on the ‘Comparable Uncontrolled Price’ (CUP) method. However, in the event CUP method is not applicable, the taxpayer should obtain an approval from GTA to use any other methods prescribed by the OECD guidelines. The master file consists of an overview of the Multinational Enterprise (MNE) group business, including the nature of its global business operations, MNE’s intangible, intra group services, transfer pricing policies, etc.

JBA & Partner’s tax specialists will assist you to comply with Transfer pricing documentation requirements which includes an analysis of the functions, assets and risks, selection of the most appropriate transfer pricing method, benchmarking analysis etc. Our tax specialists will also assist you with recommendation of cost allocation methodologies for central services and shared costs, Performance of benefit analysis for services availed and advise on the adequacy of documentation to prove the receipt of services and carry out review of cost allocation calculations and recommendation of comprehensive list of documentation to be maintained in compliance with the Transfer Pricing requirements.

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