FILE PHOTO: Abdul Basit © The Peninsula
The Transfer Pricing (TP) landscape in the Middle East region has changed and evolved significantly over the last 12 months. And more than half of the businesses in Qatar are aware of the new rules related to transfer pricing, noted a latest survey on transfer pricing by a leading consulting firm.
In line with many other countries of the region, the results of the survey in Qatar also demonstrate a high level of awareness of the new rules among relevant professionals. However, the findings of the study also suggest that in many cases, impact assessments have yet to occur in the country, according to the PwC’s Middle East Transfer Pricing Survey 2020.
The combination of extensive new compliance requirements, a refresh of business models (also pushed by COVID-19) and TP controversies means that today TP in the Middle East is no longer a tax related afterthought, but instead, has become a fundamental pillar of tax and business strategy for most groups.
Last year, the region has seen key developments in this field around the GCC, including in Qatar, Jordan, and Oman among others. To assess these changes and their impact on businesses, PwC has conducted a survey of over 120 finance and tax professionals globally who deal with a taxable presence for their businesses in the Middle East in positions ranging from tax managers to C-suite executives in various industries. 53 percent of respondents work in organisations headquartered in the Middle East, 20 percent in Europe and 17 percent in North America. The survey took place between February and June 2020 taking into account views on COVID-19’s impact on TP.
“Qatar’s results demonstrate a high level of awareness of the new rules among relevant professionals. However, our findings revealed that in many cases, impact assessments have yet to occur. As we continue to adapt post COVID-19, TP is playing an integral role from a finance, tax and business perspective,” said PwC in a statement released yesterday.
Qatar’s recent implementation of the Country by Country Reporting rules that have been in place globally since 2016, has increased the importance of these rules for groups operating in the region. New and updated economic substance and TP regulations in the Middle East, pressure from the economic impact of COVID-19, and new global developments, have forced TP functions to prioritise TP actions accordingly, creating an opportunity for businesses to revisit their TP processes. Afterall, TP arrangements are underpinned by well-defined and implemented processes, where TP technology is expected to play a significant role.
The results reflect the fact that 93 percent of businesses feel that TP as a concept is either important or very important to their group; and although, 81 percent of respondents prepare TP documentation, the approach used varies significantly. Additionally, 53 percent of respondents expect there to be some changes to their TP policies or the introduction of new transactions due to COVID-19.
Taking a closer look at the responses from Qatar, overall, 58 percent of groups in the country were aware of the new rules in the country, with 31 percent having already assessed the impact on their business. However, 42 percent, a significant portion, were unsure of the rules.
As deadlines approach, the General Tax Authority expects all relevant documentation to be submitted in the first year of implementation. As such, PwC recommends that taxpayers in Qatar carry out a review of the new rules as soon as possible to ensure compliance.
Mohamed Serokh, PwC Tax Partner & Middle East Transfer Pricing Leader, PwC Middle East, said: “In 2020, businesses across the region, as the rest of the world, are trying to navigate uncertainty and adapt to a new normal and the subject of TP now plays an integral part of this process from a finance, tax and ultimately business perspective.”
