On November 11, 2020 a new webinar will be held, together with the Cragus group that has extensive experience and expertise in the Middle East and North & Central Africa region.
During our webinar Rudolf Sinx and Shiv Mahalingham will guide you through the transfer pricing landscape of this region and discuss the similarities and differences with the European landscape.
One thing is sure, transfer pricing in this region has become increasingly important which means companies need to be aware of the transfer pricing regulations and requirements in order to mitigate any risk on tax audits and controversy. In this blog we will already go through some important developments and topics that will be discussed during the webinar in more detail.
The Transfer Pricing landscape in the region and the implementation of new legislation
With the formation of the Inclusive Framework in the wake of the BEPS-project, more countries in this region have started to adopt OECD-based Transfer Pricing regulations. Important examples of such jurisdictions are Egypt, the United Arab Emirates, Qatar, Oman and Saudi Arabia.
Transfer pricing is becoming complex and critical for companies in this region, and companies should be aware of the differences and requirements relating to transfer pricing, such as:
- Economic substance requirements;
- (Proactive) Submission of transfer pricing documentation;
- Factors of comparability;
- The transfer pricing method to be applied;
- The penalties involved.
Next to the aforementioned items there are other items which should be taken into consideration by companies active in this region in order for them to be (fully) compliant and to mitigate the risk on transfer pricing audits. During our webinar we will highlight these items and furthermore give an outlook on what to expect on the upcoming developments and implementation of transfer pricing legislation in this region (e.g. Pillar I and Pillar II).
Transfer Pricing Audit Triggers in the region
As a company you may wish to mitigate the risk on transfer pricing audits and disputes with local tax authorities (i.e. transfer pricing controversy). As such, it is important to be aware of possible audit triggers when entering into intercompany transactions.
In that respect, in practice we see that the following topics may be considered usual suspects for the Middle East and North & Central Africa:
- Consistent losses;
- Business restructuring;
- Permanent establishment issues.
Transfer pricing audits and disputes may result in penalties and adjustments made by the local tax authorities. A such, you may seek to discuss issues upfront with the local tax authorities and explore the possibility of obtaining a ruling.
Whether a ruling is possible depends on among others the jurisdiction itself and the experience of local tax officials.
The main points of attention for companies that are active in this region
It is important to be aware of the transfer pricing landscape and implementation trends for companies that have business in the Middle East and North & Central Africa. With the OECD’s introduction of the Inclusive Framework, transfer pricing has become increasingly important in this region. The region consists of many jurisdictions that each have a different view on the specific interpretation of the arm’s length principle.
Not to be forgotten is the EU perspective of having business in the Middle East and North & Central Africa. BEPS anti-tax avoidance rules (and for example the upcoming Pillar 2) have started to impact companies in low taxed jurisdictions of this region, even if there is economic substance and sound business motives for the companies’ presence.
If you would like to know more about Transfer Pricing in the Middle East and North & Central Africa, please feel free to join our free-of-charge webinar on 11 November 2020 or reach out to us directly via firstname.lastname@example.org. If you are interested in our webinar, please register by sending an e-mail to QGacademy@quanteraglobal.com.