TaxSavvyQA

Intercompany loan interest

We borrowed from our parent. What should the interest be?

The situation

Related party loans must carry arm's length terms.

The law

  • GTA President's Decision No. 4 of 2020 (transfer pricing documentation): TP declaration if revenue or assets are QAR 10 million or more; Master File and Local File if QAR 50 million or more and a related party abroad

What it means for you

Interest on related party loans should match what an independent lender would charge for similar terms. Keep a benchmark and a signed loan agreement. Interest paid to a non-resident parent can also carry 5 percent WHT.

What to do

  1. Benchmark the interest rate.
  2. Sign a loan agreement.
  3. Apply 5 percent WHT on interest to a non-resident.
  4. Keep the file for review.

We can do this for youTransfer pricing declaration, Master File and Local File: QAR 9,000

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