Qatar introduced transfer pricing laws in 2019, and they generally align with the Guidelines set by the Organization for Economic Co-operation and Development (OECD). They are incorporated within the Executive Regulations of the Income Tax Law.
Arm’s Length Principle
Qatar’s transfer pricing rules require transactions between related parties to be on arm’s length terms. This means prices in controlled transactions must reflect what would have been charged between independent parties in similar transactions and under similar circumstances.
Related Party Definition
In Qatar, a related party is defined according to international accounting standards. This broad definition generally covers entities that have control, joint control, or significant influence over another. The arm’s length principle must also be applied to transactions with unrelated foreign entities when one party benefits from a preferential tax regime or when the foreign entity is based in a non-cooperative jurisdiction—i.e., a country that lacks an agreement with Qatar for the exchange of tax information.
Transfer Pricing Methods
In Qatar, the method used to determine the arm’s length principle is the Comparable Uncontrolled Price Method. If this method is not available, then the company can use any of the other four OECD-approved pricing methods, as follows:
- Resale Price Method (RSM)
- Cost Plus Method (CPM)
- Transactional Net Margin Method (TNMM)
- Profit Split Method (PSM)
Comparability Analysis
The comparability analysis is used to evaluate whether a transaction between related parties is in line with market conditions. An uncontrolled transaction is considered comparable if there are not big differences affecting the financial indicators, or if those differences can be adjusted. In Qatar, there is no specific guidance on how to conduct the economic analysis but parties need to follow the OECD Guidelines on the matter.
Documentation Requirements
Master File and Local File
In Qatar, companies with annual revenue or total assets of at least 50 million riyals and cross-border related-party transactions must submit both a local file and a master file. These documents provide detailed information about the company’s intercompany transactions, business functions, and financial data. The local file must describe the Qatari entity’s business strategy, organizational structure, and related-party transactions, and include its financial statements. The master file must provide an overview of the multinational group’s organizational structure, business activities, intangibles, financial arrangements, and tax positions. Both files must be submitted within 60 days after the corporate tax return deadline.
Country-by-Country Reporting (CbC)
Multinational enterprise (MNE) groups with consolidated annual revenue of at least 3 billion riyals must comply with Qatar’s CbC reporting rules. Qatari-resident entities in such groups must notify the General Tax Authority (GTA) of their reporting status by the last day of the financial year. The ultimate parent or designated surrogate parent entity must submit the CbC report electronically within 12 months after the end of the financial year. The report includes country-level data on income, taxes, employees, and assets, and lists all group entities and their business activities. Late filing or failure to notify can result in penalties of up to 500,000 riyals.
Advance Pricing Agreements (APA) and Mutual Agreement Program (MAP)
Qatar uses bilateral APA procedures to manage and resolve international tax disputes, in compliance with OECD guidelines. APAs are agreements made between the taxpayer and the tax authorities, in advance, to avoid tax disputes regarding transfer pricing methodology. The authority managing the agreements is the Minister of Finance.
Penalties
Qatar does not apply penalty provisions for improper pricing. However, if the tax authorities are making adjustments, any amount due could be subject to the ordinary late payment penalty of 2 % of tax due per month.
Taxation at a Glance
Qatar is divided into seven municipalities, with Doha being the capital. Qatar’s currency is the Qatar riyal. The official name of the Qatar Tax Authority is the General Taxation Authority.
The table below provides a summary of the main taxation rates related to businesses:
Tax Type | Tax Rate |
Corporate Tax | 10% |
VAT | N.A |
Withholding tax on dividends to non-residents | 0% |
Withholding tax on interest to non-residents | 5% |
Withholding tax on royalties to non-residents | 5% |
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