Doha should consider introducing advance ruling provisions for ensuring greater certainty in tax matters, according to KPMG in Qatar.
Government could also consider granting exemptions from withholding tax (WHT) on a transaction-by-transaction basis as an alternative to the recently introduced concept of a "Trusted Entity" for WHT purposes, it said.
On advance ruling provisions, KPMG said it will significantly enhance transparency and provide greater certainty in tax matters.
"These provisions enable taxpayers to obtain authoritative guidance on the interpretation and application of tax laws in
specific situations, thereby reducing ambiguity and the risk of future disputes," it said.
KPMG also suggested implementing a mechanism for the advance collection of corporate tax liabilities to assist both taxpayers and the country in managing their cash flows more effectively.
On simplification of administration of key tax matters; it said Qatar does not automatically apply a treaty benefit and consequently the WHT become a cost to either the payer, if it is being borne by the payer or the payee. Simplification in the administration of WHT may encourage cross border trade.
On the recently introduced the concept of a "Trusted Entity" for WHT purposes, KPMG said entities with more than 1,200 WHT transactions a year, or with annual WHT payments in excess of QR10mn, may qualify for the status of "Trusted Entities," which are permitted to apply treaty benefits upfront.
However, the responsibility rests with these entities to accurately assess and apply the appropriate WHT benefit under the relevant tax treaty. Failure to do so may result in substantial penalties.
"While this development is a positive step towards facilitating certain entities in claiming treaty benefits, it is important to note that the scope of this measure may be limited, as only a small number of entities are likely to meet
the qualifying criteria for Trusted Entity status," KPMG said.
Furthermore, given the significant penalties associated with incorrect assessments, some entities may be reluctant to apply for "Trusted Entity" status, it added.
"As an alternative, it is recommended that Qatar consider granting exemptions from WHT on a transaction-by-transaction basis, similar to practices adopted in other jurisdictions," it said, adding this approach could provide greater flexibility and accessibility for a broader range of taxpayers.
Similarly, a change in shareholding should not be denied solely on the basis of outstanding liabilities on Dhareeba or ongoing tax litigation against the company, KPMG said.
"A mechanism could be introduced whereby a company may provide a bank guarantee to cover any potential liabilities. In the event that the company fails to satisfy such liabilities, the bank would be obligated to make the payment," it said.
On simplified filing, KPMG said an effort should be made to simplify the process for small entities.
"The tax authorities can establish a quantitative threshold to define small entities. Entities meeting this threshold could then be provided with the option to file tax returns based on a predetermined percentage of revenue, thereby reducing administrative burdens and facilitating compliance," it said.
