Qatar’s General Tax Authority (GTA) has issued Decision No. 4 of 2020, which requires certain taxpayers with related-party transactions to submit a transfer pricing (TP) declaration form with their 2020 tax return, as well as master and local TP files two months later in some situations. The first compliance obligation will be on 30 April 2021 for taxpayers using the regular year end of 31 December 2020. IHPCA is the leading Audit Firm in Qatar, Our talented team of experts goes beyond simple services. Here, we describe the blog Transfer Pricing.
But, what exactly is transfer pricing?
Transfer pricing is a method of accounting in which one division of a company charges another division for goods and services supplied.
Transfer pricing is the process of establishing prices for goods and services exchanged between subsidiaries, affiliates, or companies that are managed by the same parent firm. Transfer pricing can save businesses money on taxes, but tax authorities may question such claims.
The General Tax Authority’s (“GTA”) extension to taxpayers in Qatar to submit the Local File and Master File by September 30, 2021, has brought some comfort. However, it is vital that taxpayers take advantage of the GTA’s extension to establish solid Transfer Pricing documentation. In light of the GTA’s latest guidelines, including the Frequently Asked Questions (“FAQs”), we’ve outlined some of the main points that taxpayers should keep in mind while compiling their Transfer Pricing documents.
- 1. The GTA anticipates high-quality paperwork to back up transfer pricing claims, as well as contemporary proof about the taxpayer’s business.
- 2. The risk of a GTA transfer pricing adjustment is tied to the taxpayer’s TP documentation’s quality and consistency.
- 3. If the examination finds that the taxpayer has low-quality paperwork, the taxpayer is more likely to face an audit.
- 4. In contrast, a taxpayer who provides high-quality paperwork and offers a commercially reasonable outcome is less likely to face an audit or modification.