Transfer Pricing

Transfer pricing is a term used to describe intra-group pricing arrangements amongst the multinational corporations. Transactions may relate to intellectual property, tangible goods, services, loans or other financing transactions.

Interestingly, Transfer Pricing mechanism is used by many multinational enterprises to reduce the overall tax effect by exploiting gaps and mismatches in tax rules of different jurisdictions.

With increase in cross border transactions amongst multinational corporations and stringent norms imposed by many countries, the risks pertaining to Transfer Pricing has significantly increased. In 2015, Organisation for Economic Co-Operation and Development (OECD) has also introduced Base Erosion and Profit Shifting (BEPS) Actions Plans (one of the Action Plan 13 being Transfer Pricing Documentation and Country by Country Reporting) in order to restrict tax avoidance practice and allocate fair share of tax to respective countries.

In response to these factors, tax authorities around the world have become more aggressive in the transfer pricing arena, introducing stricter penalties, new documentation requirements, increased information exchange requirement.

This intense scrutiny implies significant risks for the unwary and the unprepared, particularly in a complex field such as transfer pricing where each transaction must be analysed under its own unique facts and circumstances.


We can help answer the most important questions?

  • Whether operating/ business structure is tax and transfer pricing efficient?
  • Whether global transfer pricing policy is in place for intra-group transactions?
  • Are you managing Transfer Pricing compliance effectively at group level or country level?
  • Whether internal documentation is robust enough to demonstrate arm’s length pricing policy?
  • Whether intra-group agreement is effective in line with latest tax/ transfer pricing developments?

How we can help you:

Crowe UAE’s transfer pricing practice offers full range of services such as:

transfer pricing practice


Our approach:

Our approach


Our Value preposition:

Our Value preposition:


Read More


Transfer Pricing Whitepaper

February 2021
  • Qatar – Transfer Pricing declaration form to be submitted

    In 2017, Qatar signed Organisation of Co-Operation and Development’s (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and thereby, committed to align its domestic regulation with global tax rules.

    In 2018, it introduced Country by Country (CbC) Regulation and subsequently, it published new income tax law and corresponding Executive Regulation for Transfer Pricing documentation requirements.

    In September 2020, General Tax Authority of Qatar (GTA) launched tax portal “Dhareeba” wherein taxpayers are required to file income tax return as well as other declarations. This also mandates the taxpayers to submit Statement on Transfer Pricing subject to certain threshold. The statement requires information such as

  • Information of related party – Basic details including country, main activity of related party, whether any changes in activity of related party during the year,
  • Information of transaction - Nature of transactions, transaction currency and amount, methodology applied to justify arm’s length price, declaration as to changes in Group’s Transfer Pricing policy during the year,
  • Information on intangibles - Nature of intangible owned by related party and used by taxpayer in Qatar, description of transfer pricing policy adopted by group

Recently, in February 2021, it is learnt that GTA verbally confirmed that afore-mentioned Transfer Pricing declaration to be filed by those taxpayers whose either total value of assets or revenue exceeds the threshold (which is expected to be QAR 10 million equivalent to USD 2.75 million)

Crowe UAE’s comments:

Transfer Pricing is relatively a new regime in Middle East region. While many countries have signed OECD’s BEPS Inclusive Framework, only few countries (like Kingdom of Arabia, Egypt and now Qatar) have introduced 3-tier documentation requirement in a country.

Additionally, Qatar also requires taxpayer to submit statement on Transfer Pricing along with tax return which is added compliance requirement. Since this is the first year of Transfer Pricing compliance in Qatar, it is recommended to take timely action in revisiting existing transfer pricing policy and preparing comprehensive Transfer Pricing documentation to avoid challenges in future.

  •   Bahrain – Ratified MCAA for CbCR

Bahrain has signed Multilateral Competent Authority Agreement for Country-by-Country Reporting in 2019. Recently, vide publication in official gazette on 28th January 2021, Bahrain ratified Multilateral Competent Authority Agreement for CbCR.

The ratified agreement will come into force from immediately next day of its publication

Crowe UAE’s comments:

With this move, it is expected that Bahrain will soon publish CbC Regulation in a country. While most other Gulf Co-Operation Council (GCC) countries have already implemented CbC Regulation, Bahrain too will commence the Transfer Pricing regime soon. Therefore, companies operating in Bahrain are required to proactively re-assess their Transfer Pricing policies and restructure their business model, if required, in order to be compliant with arm’s length policies.

  • Malaysia – Time limit reduce to 14 days to submit Transfer Pricing documentation

    Recently, Malaysia’s Inland Revenue Board (IRB) updated Malaysia’s Transfer Pricing Guidelines.

    Previously, Transfer Pricing documentation in Malaysia was not required to be submitted to IRB along with tax return filing. Instead, documentation was required to be submitted within 30 days from the request from IRB to submit the same. IRB

    In this context, IRB has updated the guidelines to reduce the number of days to 14 (from 30) in order to submit Transfer Pricing documentation for Transfer Pricing audit cases commending on or after 1st January 2021. Corresponding amendments were also made in penalty provision.

    Crowe UAE’s comments:

    Generally, many taxpayers adopt the approach to prepare the Transfer Pricing documentation only upon request from IRB even though it is supposed to be kept ready while filing tax return. Considering the fact that time limit is reduced to only 14 days, it is recommended to taxpayers to keep their Transfer Pricing documentation ready in order to timely submit (if required) the same.

    In our experience, Malaysia’s tax authority generally adopts aggressive approach while scrutinizing the Transfer Pricing case and therefore, non-compliance may entail stringent penalties.

  • Canada – Revocation of APA cost recovery charges

    Previously, Canada’s Revenue Agency (CRA) required taxpayer to pay cost recovery charges when applying for the Advance Pricing Agreement (APA). This charge was mainly to cover the estimated expenses of during APA process including travel cost to taxpayer’s location. Subsequently, any excess amount not incurred by CRA was refunded to taxpayer at the end of APA process.

    Recently, on 5th February 2021, CRA announced that going forward taxpayers will not be required to  pay such cost recovery charges.

    Crowe UAE’s comments:

    Most of the developed and developing countries have APA mechanism in place wherein taxpayer can enter into an agreement with tax authority in advance for certain period (generally 3-5 years) on Transfer Pricing policy to be adopted. In last many years, APA has remained attractive mechanism for multinational corporation in order to get certainty as well as on saving time and cost on Transfer Pricing matters. Moreover, in today’s scenario wherein most of taxpayers have been severely affected by Covid-19 pandemic and thus, grappling with transfer pricing compliant policy, it is expected that APA mechanism will remain attractive option for taxpayers.

    Therefore, CRA’s move to revoke cost recovery charges from taxpayers is a welcome move for those who wish to apply APA soon.

  • South Africa – Transfer Pricing adjustment upheld in the absence of Transfer Pricing documentation

Recently, Tax Court in South Africa upheld the transfer pricing adjustment for taxpayer who failed to prepare Transfer Pricing documentation to justify arm’s length nature of intra-group transactions. We have summarised the facts of the case as under:

Case - ABC (Pty) Ltd v. Commissioner for the South African Revenue Service (14305) (2021) (ZATC 1)


  • Taxpayer is engaged in the business of manufacturing, importing, and selling chemical products
  • It has a catalyst division that is focused on manufacturing and selling catalytic converters (catalysts).
  • In order to manufacture catalysts, taxpayer imported Precious Group of Metals (PGMs) from its Swiss Group entity. Such PGMs was used in a manufacturing process and thereafter, final products in the form of Catalysts were sold to end customers in South Africa.
  • During the audit proceedings, taxpayer failed to product Transfer Pricing documentation and therefore, tax authority conducted its own analysis.
  • In fact, tax authority’s in-depth analysis included functions performed, risks assumed and assets employed (FAR analysis) by taxpayer and its related party, analysis of cost base of the taxpayer, performing benchmarking search analysis on database to identify independent comparable companies in similar business activity and adopting Transactional Net Margin Method (TNMM) with Full Cost Mark-up (FCMU) to benchmark the transaction.
  • Based on the above analysis, since the taxpayer’s profitability was lower than median, it was concluded that inter-company transactions were not at arm’s length and therefore, tax adjustment was made by authorities.

    Tax Court’s decision:

  • Tax Court decided the matter in the favour of tax authority and upheld the adjustment.

    Crowe UAE’s comments:

  • It is recommended to prepare and maintain comprehensive Transfer Pricing documentation to substantiate intra-group transactions. In the absence of appropriate documentation, tax authority may conduct its own analysis and most probably may make adverse tax adjustment. Additionally, there is a greater risk of levying penalty for such non-compliance.
  • Therefore, it is advisable for taxpayers to revisit their transfer pricing compliance for past years and proactively take steps to prepare robust documentation for future years.
March 2021
  • United States – IRS issues annual report Advance Pricing agreement for 2020

On 23rd March 2021, Internal Revenue Service (IRS) issued Announcement 2021-6 providing the Advance Pricing and Mutual Agreement (APMA) program’s 22nd annual report on advance pricing agreements (APAs) for 2020. Report also provided few interesting statistics on APA program for the year 2020 which is as under:







Applications filed





APAs executed





Open APAs as on 31st December 2020





Renewals executed





Pending renewals as on 31st December, 2020





Applications revoked/ cancelled





Applications withdrawn





While most of the transactions covered in APA executed in 2020 involve the sale of tangible goods (35%) or provision of services (38%), interestingly, Annual Report mentions that approximately 25 percent of transactions covered in APAs executed in 2020 involve the use of intangible property, which can be among the most challenging transactions in APMA’s inventory.

Crowe UAE’s comments:

APA has been one of the most popular program amongst multinational in many developing and developed countries. Saving of litigation cost and time as well as certainty received by multinational on Transfer Pricing policy for 3-5 years (even more in few countries) is a key advantage as to why multinational prefers to opt for APA.


  • Mauritius – Country by country report deadline extended

Mauritius Revenue Authority (MRA) has issued a communique dated 26th March 2021 informing taxpayers that due date for filing country by country (CbC) report/ notification for the accounting period ended 31st March 2020 has exceptionally been extended from 31st March 2021 to 20th April 2021.

Extension has been announced as a result of national sanitary lockdown in the country in the country in March 2021.

Crowe UAE’s comments:

This relaxation will definitely help the taxpayers in undertaking their CbC compliance on timely basis and without suffering any monetary penalty or other consequences.

  • Belgium – Deadline for submission of local file extended

On 18th March 2021, Belgian tax authorities have announced the extension in filing corporate tax return for the financial year ended between 31st December 2020 and 28th February 2021 upto 28th October 2021. The extension is on account of difficulties faced by taxpayers due to Covid-19 pandemic.

This extension of deadline is also applicable for filing local file reporting that is required to be submitted in Form 275LF. Submission of local file is required by each Belgian entity of multinational group if any of the following threshold meets:

  • Aggregate of operational and financial income equal to or exceeding Euro 50 million (excluding non-recurring income); or
  • Balance sheet total equal to or exceeding Euro 1 billion; or
  • Annual average of employees equal to or exceeding 100 full-time equivalents.

Crowe UAE’s comments:

Extension would help the taxpayers in undertaking their compliance on timely basis. It takes substantial efforts in preparing local transfer pricing documentation, taxpayers would have additional time to collate/ prepare the documentation for this year.


  • Serbia – Ministry of Finance published arm’s length interest rates for 2021

On 19th March 2021, Ministry of Finance has published a Rulebook in Official Gazette of Serbia No. 24 providing arm’s length interest rates for 2021 for intra-group loans.

As per tax regulation of Serbia, in order to determine the arm’s length rate of interest, taxpayers may either (i) adopt interest rates as prescribed by ministry of finance in Rulebook; or (ii) apply OECD method for determining arm’s length interest rates. Taxpayers may need to follow any of this option on consistent basis for all inter-company loans.

Arm’s length prescribed by ministry of finance for 2021 is as under:


Credit/ loan currency

Banks/ Financial leasing company

Other companies

Short term loan

Long term loan

Short term loan

Long term loan






























Crowe UAE’s comments:

Determination of arm’s length price for the financial transactions is much talked topic in recent years. Infact, OECD has released guidance on financial transactions in 2020 wherein they have emphasized on credit rating approach while determining arm’s length interest rates.

In Covid-19 pandemic situation, it is expected that intra-group financing will significantly increase amongst multinational group and therefore, it is recommended to taxpayers to relook their transfer pricing policy of financial transactions.


  • Zambia – Introduces Country by country Reporting

Zambia Revenue Authority published a Statutory Instrument No. 117 of 2020 to introduce country by country (CbC) reporting regulation to be effective from 1st January 2021. CbC Regulation is applicable for a MNE Group if the consolidated group revenue exceeds  Zambia Kwacha 4,795 million (equivalent to EUR 750 million). 

Regulation requires two-fold compliances as under:


Sr. No.

Compliance required


Required by whom


Filing of notification

On or before last day of Group’s reporting accounting year

Constituent entity tax resident in Zambia


Filing of CbC Report

Within 12 months from last day of Group’s reporting accounting year

Ultimate parent entity or surrogate parent entity

Tax resident constituent entity that is not the ultimate parent entity or surrogate parent entity may also be under the obligation to file a CbC report where

  • Group’s ultimate parent entity is not obliged to file a report in its tax residence jurisdiction; or
  • Country in which the ultimate parent entity is tax resident, whilst having an international agreement with Zambia, does not have a qualifying competent authority agreement with the latter; or
  • there is a systemic failure in the tax resident country of the ultimate parent entity and the Commissioner-General notifies the constituent entity in Zambia.


Crowe UAE’s comments:

CbC Reporting Regulation in Zambia is mainly in line with OECD requirement and thereby, Zambia has also adopted 3-Tier Transfer Pricing documentation approach of OECD. Further, it is learnt that Zambia Revenue Authority is quite aggressive in scrutinizing the intra-group transactions of multinational group. Therefore, it is recommended for multinational having presence in Zambia to revisit their Transfer Pricing policy of intra-group transactions and maintain robust documentation to demonstrate arm’s length principles.


Contact us

Binit Shah
Partner, Information Technology