Press release

17 Jan 2021 Doha, QA

Regional tax landscape has evolved significantly, Qatar no exception: EY

Doha, Qatar– 17 January 2021: The business and tax landscapes have changed rapidly, and the pace and complexity of change continues to increase, according to EY experts at the annual EY tax seminar for Qatari businesses The virtual session, which was attended by more than 300 tax and accounting professionals from entities across Qatar, discussed updated regulations and the potential challenges that different industries in the country could face.

  • EY holds virtual seminar to discuss key issues of importance to businesses and industries in Qatar, including the new Dhareeba system, tax exemption provisions, transfer pricing and international tax developments, and changes in the local business landscape
  • Seminar was attended by more than 300 tax and accounting professionals from entities across Qatar
  • 52% of tax professionals in the EMEIA region felt that they were not investing enough in data and technology to manage tax risks

The business and tax landscapes have changed rapidly, and the pace and complexity of change continues to increase, according to EY experts at the annual EY tax seminar for Qatari businesses The virtual session, which was attended by more than 300 tax and accounting professionals from entities across Qatar, discussed updated regulations and the potential challenges that different industries in the country could face.

During the session, EY revealed the results of a recent study that surveyed tax clients from the EMEIA region about key market drivers for the tax function, and how they would act going forward. According to the EY survey, 52% of tax professionals felt that they were not investing enough in data and technology to manage tax risks. Interestingly, the results also showed that 95% of organizations believe there will be an increase in their tax risk profile, including reputation risk.

Ahmed Eldessouky, Business Tax Advisory Partner, EY, said:

“The COVID-19 pandemic forced regional governments to concentrate on stimulating business, supporting individuals, as well as using tax and expenditure to support companies. The Qatar Tax Authority was amongst the first in the region to postpone its tax returns and payments deadlines to support the private sector and the wider economy.”

“Today, tax authorities have renewed focus on opening additional revenues, with an even greater focus on tax audits and transfer pricing. The landscape is also being completely transformed by digitization, and tax administration processes are already far more digital than initially expected. These trends are also leading a greater desire by the government for more access to real time data – and there is now a larger emphasis on companies operating in a digital compliance model, as well as sharing an unprecedented volume of data directly with the government for B2G reporting.”

Dhareeba system

On the domestic front, one of the key topics covered in the webinar included the implementation of the new Qatar tax administration system “Dhareeba,” which went live on 1st July 2020. While welcoming the Tax Authority’s efforts to implement the new system and alleviate the burdens associated therein, it was pointed out that taxpayers should remain aware of these new changes in their obligations to avoid any potential setback.

Although it should be noted that, once fully operational, the new Dhareeba system will significantly facilitate the taxpayers’ management of their tax obligations and will ensure smoother communications with the tax administration.

Tax exemption provisions

EY tax leaders also emphasized the General Tax Authority’s (GTA’s) clarification of the tax exemption provisions provided under the new Income Tax Law (ITL) and its Executive Regulations, specifying that the legislators intentions through these provisions is to determine the direct ownership of legal persons that are partially owned by Qatari natural persons in proportion to their share of the entities’ profits. This will enable the GTA to identify the legal person’s Qatari source taxable income. Thus, companies owned by Qatari natural persons should substantiate the latter’s ownership, by presenting enough documentation in order to benefit from the exemption.

VAT legislation

With respect to VAT, it was noted that Qatar has already ratified the VAT Framework Agreement of the GCC, and continues to set the stage to implement VAT. EY experts mentioned that due to recent agreement between the GCC countries, plans for VAT implementation in Qatar are expected to push forward soon, and it was strongly advised that businesses in Qatar ensure proper VAT setup and compliance at the earliest – given that most companies typically need at least six months to be ready.

Transfer pricing and international tax developments

Regarding international taxation, attention should be paid to the release of the Organisation for Economic Co-operation and Development (OECD) /G20 Inclusive Framework’s blueprint of Pillar 2, which sets up rules to ensure that all large internationally operating businesses pay at least a minimum level of tax, and its implication for companies in Qatar.

Marcel Kerkvliet, International Tax and Transactions Services Partner, EY, said: 

“We foresee Pillar 2 having a significant impact on global multinationals operating in Qatar, reflecting the nation’s focus on transforming international taxation. Pillar 2 is designed to ensure that large international operating businesses pay minimal level of tax, regardless of where they are headquartered or where they operate. The Inclusive Framework committee have agreed to continue discussions and aim to reach a political agreement by mid-2021.”

Finally, this year’s seminar was also an opportunity to address the new Transfer Pricing (TP) regulation more thoroughly – as Qatar-based entities with related-party transactions exceeding a prescribed revenue/asset threshold are required to file a TP form/questionnaire, master TP file and local TP file by the tax return filing deadline.

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Notes to editors

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