The tax audit methods are dramatically evolving, and the rate and depth of transformation is accelerating in the present business environment. The pandemic outbreak compelled governments to focus on boosting commerce and supporting businesses through tax and spending. To aid the private industry and the economy, the Qatar Tax Authority was one of the first in the world to prolong tax returns and settlement timelines.
Qatari tax authorities have placed a greater emphasis on compliance, data gathering, tax returns, and tax receipts and have implemented a number of measures to assure adherence, including:-
- Dhareeba tax portal Site
- Country by Country Reporting (CbCR) standards
- A streamlined tax return is provided for exempted entities
- Laws governing transfer pricing
- Execution of the BEPS Action Plan 2.0
Dhareeba Tax Portal System
There has been a considerable rise in the quantity and variety of tax audits undertaken by the General Tax Authority (“GTA”) since the foundation of the GTA and the adoption of the new Qatar tax administration system, “Dhareeba,” which went live on July 1, 2020.
The Dhareeba tax website strives to make tax services as simple as possible. It is an effective digital network that offers cutting-edge systems to handle tax transactions in Qatar. It’s a significant step forward in Qatar’s ongoing attempts to fulfill its digitalization goals.
The GTA forces taxpayers to produce additional paperwork or explanations inside a twenty-day timeframe in the majority of situations. Taxpayers are obliged to adapt within the set deadlines by the GTA, and the Income Tax Law (ITL) gives the GTA the authority to grant tax evaluations on presumed grounds, imposing additional tax liabilities and fines if taxpayers struggle to provide adequate relevant documentation or justifications within certain timeframes.
GTA’s Domain Expansion
Several taxpayers experience difficulties providing the necessary information to the GTA. If taxpayers had been constructive or reacted tactfully, then additional in-depth inquiries and/or evaluations could have been bypassed.
The following are some of the domains where the GTA has lately expanded its supervision:
- Payments made to suppliers and subcontractors, along with the precision of withholding tax deductions and accompanying papers.
- Wages, direct charges, and other high-cost variables are included in the financial statements.
- For intercompany transactions, the integrity of transfer pricing documents.
- Expenditures that are (conditionally) banned
Expert View
As part of the tax audit, if GTA makes changes to the submitted tax returns, then the individual will incur high costs to challenge such adjustments in the Tax Appeal Committee (“TAC”) or in the Court. Any extra tax resulting from any changes or assessments imposed by the GTA would be subject to hefty consequences. This could be avoided if the taxpayers are well planned.
Taxpayers should review their active tax years to guarantee that their tax and accounting data, and documents, are correctly updated and easily available in case of a GTA tax audit.
Audit has a broader responsibility to promote tax compliance and increase public confidence in the impartiality and functioning of the tax regime. This facilitates in the strengthening of society’s standards as well as the identification of general difficulties that may pose a threat to the tax system’s operation.