Worldwide transfer pricing reference guide 2014

Qatar
Taxing authority and tax law
The State of Qatar has two tax regimes both with transfer pricing provisions:
1. State tax regime — The Income Tax Law No. 21 of 2009 (Qatar Income Tax Law) and its related Executive Regulations should be applied
to Qatar taxpayers, except those registered in the Qatar Financial Center (see below). The taxing authority under this regime is the Qatar
Public Revenues and Taxes Department (PRTD).
2. Qatar Financial Centre (QFC) tax regime — The QFC Law, its regulations and the Qatar Financial Center Authority (QFCA) Tax Manual
Extract on Transfer Pricing (TP Manual) should be applied to QFC registered entities. The taxing authority under this regime is the QFCA
Tax Department.
Relevant regulations and rulings
State tax regime:
The Qatar Income Tax Law introduced transfer pricing provisions within the general anti-tax avoidance framework, which states that
“where the taxpayer enters into arrangements or carries on operations or transactions and one of the main purposes of which is to
avoid the payment of the tax due, the PRTD may counteract the tax advantage the taxpayer obtained because of such arrangements,
operations or transactions, in accordance with the provisions of the Executive Regulations of the Qatar Income Tax Law.” The Qatar
Income Tax Law aims to ensure that related party transactions are conducted under arm’s length conditions. As such, the PRTD may:
• Apply the arm’s length value to a deed or an economic event subjected to a different value by the taxpayer
• Recharacterize the contract where the form of such a deed does not reflect the substance thereof
• Adjust the amount of the tax due by the taxpayer or any other person involved in the type of arrangements, operations or transactions
Under the Executive Regulations of the Qatar Income Tax Law, a person shall be deemed to be related to another person in any of the
following cases:
• For natural persons, where one of them is a spouse, an in-law or a relative to the other up to the fourth degree
• For natural and legal persons, where the natural person owns, alone or with other related person or persons, directly or indirectly, more
than 50% of the capital, voting rights or income rights of the legal person
• For legal persons, where one of them owns, alone or with other related person or persons, more than 50% of the capital, voting rights or
income rights of the other, or where another person, or other related persons, own, directly or indirectly, more than 50% of the capital,
voting rights or income rights of both legal persons
QFC tax regime:
The TP Manual provides guidance on the application of transfer pricing rules of the QFC Tax Regulations. Chargeable profits and tax
losses must be calculated on an arm’s length basis.
• Part 8 of the QFC Tax Regulations has a one-way adjustment approach and will only be applied where the resulting transfer pricing
adjustment would result in an increase in the amount of chargeable profits or a reduction in tax losses.
• The TP Manual specifies that the arm’s length capacity of a QFC taxpayer is the amount of debt which it could and would have financed
its operations, as a stand-alone entity, from a non-related independent lender. The TP Manual has outlined safe harbor debt/equity ratios
as follows:
• 2:1 for a non-financial institution
• 4:1 for a financial institution
OECD guidelines treatment
State tax regime:
Pursuant to the Executive Regulations to the Qatar Income Tax Law, where the data required to apply the CUP method is not available,
the taxpayer should submit to the PRTD an application to adopt other transfer pricing methods approved by the OECD.
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