Qatar Financial Centre Authority issues first TP manual providing guidance for the application of the arm’s length principle

Tax Insights ()

The Qatar Financial Centre (QFC) Authority will imminently issue a New Transfer Pricing Manual (New TP Manual) providing guidance for the application of the arm’s length principle to cross border and domestic transactions between registered QFC tax payers and their associated parties.

These are the first transfer pricing guidelines to be issued in the Gulf Cooperation Council (GCC) and the second in the Middle East since Egypt, which demonstrates the increasing focus on transfer pricing by tax authorities in the region.

The New TP Manual covers many areas including the basic rules on transfer pricing, intra-group financial transactions and the attribution of profits to a permanent establishment (PE) based on determining the corresponding attribution of debt to it. Transfer pricing methods specified in the New TP Manual are based on those set out in the OECD Transfer Pricing Guidelines. The New TP Manual also provides guidance on the use of financial databases, transfer pricing documentation and the maintenance of records. It should be noted that the New TP Manual is not legislative, it provides guidance to support the application of the QFC tax regulations. Furthermore, at the time of this PKN Alert, the New TP Manual is still in draft form but following a meeting to occur on the 12 June 2013 it is expected to be issued in final.