Transfer Pricing lands in the Middle East

14 January, 2019 - Deloitte Middle East has launched the first volume of its whitepaper series to help businesses best prepare for Transfer Pricing (TP) Legislation in the Middle East. The first volume of the series covers the results of a Transfer Pricing client survey of businesses operating in the region. The whitepaper also provides key guidelines that businesses need to take into consideration when assessing the risks and opportunities arising from new transfer pricing regulations.

Transfer Pricing (TP) is a practice that allows for pricing transactions internally within businesses and between companies that operate under common control or ownership, including cross border transactions. A number of Gulf Cooperation Council (GCC) countries have started adopting transfer pricing regulations. Authorities from GGC countries have already signed the Base Erosion and Profit Shifting (BEPS) Inclusive Framework (IF) and have committed to applying four minimum standards. Other IF Signatories for the Middle East include Egypt and Tunisia with Kuwait signing the Multilateral Convention (MC) and Lebanon expected to sign soon.

“With 82% of respondents of the Deloitte survey agreeing that transfer pricing structures are under critical evaluation in the MENA region, the opportunities are endless for businesses investing in the region. At Deloitte, we have an efficient transfer pricing structure that can assist companies manage risks and provide solutions to support their transfer pricing practices to achieve their tax objectives,” said Shiv Mahalingham, Deloitte Middle East Transfer Pricing Leader.

Key findings from the survey

The Deloitte survey was conducted with CFOs and key tax leaders in the region and the main findings included the following:

• Transfer pricing compliance was a concern for 65% of respondents
• 25% of respondents actually changed the group transfer pricing policy/structure within their firm in response to recent legislative developments in the region
• 82% of respondents agree that transfer pricing are under greater scrutiny in the region
• 50% of respondents noted that C-suite and board of directors have changed their views on tax planning since the adoption of regulations in the region; and,
• 54% of respondents are concerned about increased media, political and activist group interest in corporate taxation

“With a number of transfer pricing regulations going to be introduced in MENA over the next few years, this should be viewed as opportunity to introduce a structured intra-group pricing framework to align with investment strategies and overcoming risks by implementing technology solutions that align with existing business systems,” said Nauman Ahmed, Deloitte Middle East Tax Leader.

To view the full whitepaper (Volume 1), please visit the following link

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About Deloitte & Touche (M.E.):

Deloitte & Touche (M.E.) (DME) is a licensed member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is a leading professional services firm established in the Middle East region with uninterrupted presence since 1926. DME’s presence in the Middle East region is established through its affiliated independent legal entities which are licensed to operate and to provide services under the applicable laws and regulations of the relevant country. DME’s affiliates and related entities cannot oblige each other and/or DME, and when providing services, each affiliate and related entity engages directly and independently with its own clients and shall only be liable for its own acts or omissions and not those of any other affiliate.

DME provides audit and assurance, tax, consulting, financial advisory and risk advisory services through 25 offices in 14 countries with more than 3,300 partners, directors and staff. It has also received numerous awards in the last few years which include, Middle East Best Continuity and Resilience provider (2016), World Tax Awards (2017), Best Advisory and Consultancy Firm (2016), the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW), as well as the best CSR integrated organization.