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Qatar introduces Country-by-Country Reporting requirements

Executive summary

On 9 September 2018, Qatar published new Country-by-Country Reporting (CbCR) requirements in the Official Gazette. An entity that is tax resident under Qatar’s State tax system will have a CbCR filing or notification requirement in Qatar if it is a member of a multinational group that had at least QAR3 billion (approximately US$824 million) consolidated group revenue in the preceding fiscal year. It is expected that similar requirements will be established for entities tax resident in the Qatar Financial Centre (QFC).

The first reporting deadline is 31 December 2018. Entities that are affected by the new rules will need to make arrangements to comply with the new requirements, as well as review the impact Qatar’s new rules may have on the group’s reporting and notification requirements in other countries.

Detailed discussion

Background

Since the Organisation for Economic Co-operation and Development (OECD) and G20 countries adopted a 15-point Base Erosion and Profit Shifting (BEPS) Action Plan in 2013, BEPS has remained a key priority for governments around the globe. The final reports, issued in 2015, represent a package of measures that governments should implement to address features of tax regimes that facilitate BEPS. The package includes a set of minimum standards.

In November 2017, Qatar became an Associate Member of the BEPS Inclusive Framework, committing Qatar to aligning with the shared international consensus on international tax rules and implementing the BEPS minimum standards.

One of the minimum standards is Action 13, which introduces a requirement for the largest multinational groups to file a Country-by-Country (CbC) report setting out financial information for each tax jurisdiction where the group has a resident entity. The general principle is that the CbC report would be submitted only to the tax jurisdiction of the ultimate parent entity or head office company, and then made available to other relevant tax jurisdictions through tax information exchange instruments. For the mechanism to work effectively, each member country needs to give effect to the standard CbCR legislative model in its domestic law.

Tax authorities will use CbC reports to assess high-level transfer pricing and BEPS-related risks for multinational groups.

New rules in Qatar

On 9 September 2018, Qatar published Decision No. 21 of 2018 by the Ministry of Finance in its Official Gazette. The Decision outlines new CbCR requirements for entities that are registered under the State system, and is aligned with the Model Legislation set out in the Action 13 final report.

The QFC operates as a separate jurisdiction in Qatar with its own laws and judicial system. To ensure Qatar meets the BEPS minimum standards, it is expected that the QFC will issue a supplementary notice or concessionary statement of practice to give effect to similar CbCR requirements in the QFC.

Under the new rules, a Qatar tax resident entity is required to file a CbC report or notification in Qatar if it is a member of a multinational group that had at least QAR3 billion consolidated group revenue in the preceding fiscal year.

The new reporting requirements apply to fiscal years beginning on or after 1 January 2017 (reporting year 2017). The first filing deadline is 31 December 2018.

Implications

Companies that are tax resident in Qatar need to determine if they are subject to filing or notification requirements under the new rules.

For Qatar-headquartered groups that have filed CbC reports for the 2016 reporting year in the jurisdiction of a Surrogate Parent Entity (SPE), the new rules could result in the filing location of the CbC report transferring to Qatar from the SPE’s tax jurisdiction. However, because of requirements in other countries’ CbCR rules concerning exchange of information, Qatar’s rules may not affect current-year report filing requirements in other jurisdictions. A Qatar-based group will need to review its CbCR requirements globally to ensure the group complies with its CbCR requirements in all relevant jurisdictions.

Qatar entities that are members of multinational groups that have annual consolidated revenues that exceed QAR3 billion also need to comply with CbCR notification or CbC report filing requirements in Qatar for fiscal years commencing on or after 1 January 2017.

The first reporting deadline is 31 December 2018. However, because the compliance requirements can be affected by exchange of information arrangements between countries, it is important to determine what the Qatar requirements are ahead of the deadline.

EYG no. 011216-18Gbl

Download this Tax Alert as a PDF file.

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