Disclosure Requirements

Under the state regime, effective from tax years beginning on or after 1 January 2020, resident companies with a total value of assets or total annual turnover exclusive of tax exceeding the threshold amount of QAR 10 million and having associated entities in Qatar or abroad, are required to submit a transfer pricing declaration along with the tax return using the new Dhareeba tax portal. The transfer pricing declaration must include the following information:

Information about the group of companies to which the resident-related entity belongs, including:

type of activities and changes occurring during the financial year covered by the declaration;
transfer pricing policy adopted by the group; and
list of group assets used by the resident entity, including identity and country of tax residence of the group member owning the relevant assets;

Information about the resident reporting entity, including:

type of business activities, and any changes occurring during the reporting period;
summary of transactions carried out between resident entity with other related entities where the total amount of transactions exceeds QAR 200,000, including the amounts involved, and the identity and tax residence of the counterparty; and
presentation of the transfer pricing policy used, and any changes occurring during the reporting period.

Further, sufficient documentation substantiating the compliance of a taxpayer’s transactions with associated parties must be kept in case an audit is initiated. The taxpayer may be required to provide information within 30 days upon request by the tax authorities. A nil declaration may be submitted by the taxpayers not undertaking transactions with associated entities.

In addition, a transfer pricing study is needed when applying for the use of alternate methods under the State regime (in opposition to the QFC regime).

Under the QFC transfer pricing rules, a company must state in their tax return whether or not any adjustments to local-source profits or losses are needed, and if needed, the computations that reflect the adjustments must be attached.

Standard Documentation

Taxpayers are required to maintain contemporaneous transfer pricing documentation in relation to their transactions with related entities. The transfer pricing documentation consists of a Master file and a Local file and is required to be prepared in conformity with the OECD guidelines. For tax years beginning on or after 1 January 2020, taxpayers with an annual turnover exclusive of tax or total asset value equal to or exceeding QAR 50 million and having related entities outside Qatar are required to prepare the Master file and the Local file.

A materiality threshold of QAR 200,000 in aggregate transactions per category applies for the preparation of the Local file. Taxpayers who are not required to submit the Master file and Local file may be required to submit information and documents about their material cross-border transactions upon the request by the tax authorities during the course of a tax examination or a transfer pricing risk assessment.

Master file

The contents of the Master file include:

Group’s organizational structure;
MNE’s areas of activities including:

details of sources/determination of profit;
description of the supply chain for five core products or services provided by the group along with other products or services contributing to 5% or more of the group’s turnover;
list and description of important service arrangements between members of the group other than research and development (R&D) services, including a description of capabilities of the main location rendering important services and transfer pricing policies adopted for allocating service costs and determining prices to be paid for intra-group services;
description of the main geographic markets where the group’s products and services are marketed;
functional analysis of principal contributions by individual entities within the group to value creation, i.e., core functions performed, significant risks assumed, and important assets used; and
description of important business reorganizations, acquisitions, and divestments that were undertaken during the tax year;

MNE’s intangibles including:

general description of the group’s strategy for the development, ownership, and exploitation of intangibles, including the location of principal R&D facilities and management;
list of intangibles or classes (group) of intangibles of the group important for transfer pricing purposes, along with entity ownership;
list of important agreements between associated enterprises related to intangible assets, including cost distribution agreements, principal research service agreements, and license agreements;
general description of the group's transfer pricing policies relating to research and development and intangible assets; and
general description of significant transfers of interests in intangible assets between associated enterprises along with the reference of countries and related remuneration;

Financing activities between group members, including:

general description of the method of group financing, including a description of significant financing agreements, entered with independent lenders;
information pertaining to group members providing central financing function for the group, including countries in which they are organized and their place of effective management; and
general description of transfer pricing policies relating to financing agreements between associated enterprises; and

Financial and tax position, including:

annual consolidated financial statements of the group for the year concerned, if prepared for financial disclosure purposes or as required by law or related to internal management; and
list and description of advance pricing agreements concluded by the group and other tax rulings pertaining to the distribution of profits between countries.

The Master file is required to be submitted electronically on the Dhareeba tax portal within 60 days after the deadline for submitting the annual tax return. For calendar fiscal years, the deadline is 30 June as the annual tax return is due within 4 months after the end of the year or 30 April.

Local file

The contents of the Local file include:

Local entity details, including:

a description of the management structure and organizational structure of the local entity and a description of parties reporting to them on the management of the resident entity and the countries in which those parties maintain their main offices;
a detailed description of activities undertaken and strategies employed by the local entity, including whether the entity has been involved in a reorganization or transfer of intangible assets during the current or previous financial year, and an explanation of aspects of such operations involving the entity; and
key competitors;

Controlled transactions, including:

a description of material controlled transactions with associated enterprises and conditions in which the transactions have taken place, including transactions pertaining to manufacturing services, purchase of goods, provisions of services, loans, financial guarantees, and licensing of intangibles;
the amount of intra-group payments and receipts for each category of controlled transactions involving the local entity, specified as per tax jurisdiction of the foreign payer or recipient;
information on associated enterprises involved in each category of controlled transactions and the relationships;
copies of all important inter-company agreements concluded by the local entity;
detailed comparability and functional analysis of local entity and relevant associated enterprises for each category of controlled transactions, including analysis of changes, if any, compared to previous financial years;
indication of the most appropriate transfer pricing method for each category of transactions and rationale for their selection;
in case of selection of associated enterprises as the tested party, submission of a statement along with the explanation for the choice;
a summary of important assumptions made during the application of the transfer pricing methodology;
clarification of rationale for adopting of multi-year analysis methodology;
list and description of comparable uncontrolled transactions and financial indicators for independent enterprises relied on within transfer pricing analysis along with the description of the method used to search for the comparable data and sources of such data;
a description of adjustments when undertaken, along with indications as to whether adjustments were made to results of the tested party, comparable uncontrolled transactions, or both;
a description of the rationale for concluding that the transfer pricing for transactions is at arm’s length;
a summary of financial assumptions used for the application of the transfer pricing methodology; and
copies of unilateral, bilateral, or multilateral APAs and other tax rulings where Qatar is not a party and relate to relevant controlled transactions.

Financial statements, including:

annual financial statements of the local entity for the financial year concerned;
information necessary for the understanding of financial data used for applying transfer pricing method for the preparation of annual financial statements; and
summary tables of comparable financial data used in the analysis and the source of such data.

The Local file is required to be submitted electronically on the Dhareeba tax portal within 60 days after the deadline for submitting the annual tax return. For calendar fiscal years, the deadline is 30 June as the annual tax return is due within 4 months after the end of the year or 30 April.

Country-by-Country (CbC) Reporting

Qatar has implemented Country-by-Country (CbC) reporting as per OECD BEPS Action 13 and has also signed the Multilateral Competent Authority Agreement on the Exchange of CbC Reports (CbC MCAA).

CbC reporting requirements are applicable in Qatar for reporting fiscal years beginning on or after 1 January 2018. The requirements are in line with the OECD guidelines and apply to ultimate parent entities (UPE) of MNE groups meeting an annual consolidated group revenue threshold of QAR 3 billion in the previous year.

The non-parent constituent entities of MNE groups meeting the QAR 3 billion threshold may be required to submit a CbC report if they are resident in Qatar and meeting the following requirements:

The ultimate parent entity is not required to submit a CbC report in its state of residence; or
The ultimate parent’s state of residence has an existing international agreement providing for the automatic exchange of information with Qatar, but not a competent authority agreement for the exchange of CbC reports by the deadline for submission of CbC reports; or
There is a systemic failure for exchange by the ultimate parent’s state of residence, and this had been notified by the competent authority to the constituent entity.

In case more than one constituent entity is resident in Qatar, and local filing requirements are applicable, the MNE group may designate one entity to fulfill the local filing requirement and notify the competent authority. The local filing requirement is not applicable where the CbC report is filed by the surrogate parent entity, subject to certain conditions, including that there is a competent authority agreement for the exchange of information on CbC reports with the surrogate parent’s state of residence by the deadline for submission of CbC reports and the Qatar competent authority has been notified.

All constituent entities are required to notify the competent authority regarding their status as an ultimate or surrogate parent, or if neither, must notify the competent authority of the reporting entity along with its place of residence.

A CbC report is required to be filed electronically within 12 months after the last day of the reporting fiscal year of the MNE group in the manner prescribed by the competent authority.

A CbC notification is also required to be filed by constituent entities of an MNE group resident in Qatar in respect of the reporting entity for the group. For fiscal years beginning on and after 1 January 2018, the CbC notification was required to be filed within 12 months following the end of the reporting fiscal year. Hence, the deadline for filing the CbC notifications for the fiscal years 2018 was 31 December 2019. For subsequent fiscal years, the CbC notification must be submitted no later than the last day of the reporting fiscal year.

Where the CbC report is required to be filed locally in Qatar, the contents of the CbC report include the following for each jurisdiction:

Table 1:

revenues (unrelated parties, related parties, and total);
profit (loss) before tax;
income tax paid (cash basis);
income tax accrued - current year;
stated capital;
accumulated earnings;
number of employees; and
tangible assets - other than cash and cash equivalents.

Table 2:

constituent entities resident in each tax jurisdiction (including Tax ID and address);
jurisdiction of organization or incorporation if different from jurisdiction of residence; and
main business activities of each constituent entity.

Table 3:

additional information or explanation deemed necessary to understand the CbC report.

The CbC requirements for Qatar tax-resident entities that are members of MNE groups whose ultimate parent entities or surrogate parent entities are tax residents outside Qatar are currently suspended or deferred.

Language of Documentation

The documentation is required to be prepared in the Arabic language. However, the tax authorities may accept an English language version.

Penalties

Penalties for non-compliance with the CbC reporting requirements are as follows:

QAR 100 for each day when there is a failure to submit a timely CbC notification or when the submission includes false or incomplete information; and
QAR 500 for each day when there is a failure to submit a timely CbC report or when the submission includes false or incomplete information in the report.

Delay in the filing of the Master file and the Local file attracts late filing penalties of QAR 500 per day, up to a cap of QAR 180,000.

There are no specific transfer pricing adjustment penalties under Qatar's State regime. Adjustments may be subject to standard tax penalties (see Sec. 13.5.)

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