Dubai: Egypt has issued the first comprehensive transfer pricing (TP) guideline in Arabic — the price at which companies can sell goods or services to associated parties. It is likely to be a model for the region, tax experts said.
"They are the first of their kind to have been issued in the Arabic language, accompanied by an English version. As a result, it is very likely that they will be the model for guidelines in other Arabic-speaking jurisdictions, making their publication an important regional event," Anthony Mahon, a spokesperson from Deloitte's Cairo office, said yesterday at Deloitte Middle East's fifth tax seminar.
Gulf countries have online statements about TP and the new guidelines will push them to create their own legislation, said John Belsey, who leads Deloitte's international tax practice in the region. The recent tax law in Iraq imposing a 35 per cent corporate income tax rate on oil and gas companies has investors looking at Abu Dhabi as a safer and cheaper option, said Alex Law, director of International and Merger and Acquisition Tax for Mena at Deloitte.
The tax rate was increased from 15 per cent on all upstream oil and gas activities in the region in February last year and is likely to have the biggest impact on support services companies, he said. "Margins that you make on those projects are often much smaller and therefore a rate of tax at 35 per cent is particularly aggressive in what we see in the wider region," he said.
With the increased tax rate in Iraq and regional unrest, Abu Dhabi is looking good to investors in the oil and gas industry.
"The overwhelming opportunity in Iraq is huge, while I would say that as Abu Dhabi looks to renew its licences in the oil and gas industry, Deloitte is seeing increased interest in Abu Dhabi as a potential point of investment opportunity in upstream, particularly with difficulties faced in Libya, Syria and Egypt," he said