Singapore: New transfer pricing guidelines

Singapore: New transfer pricing guidelines

The Inland Revenue Authority of Singapore (IRAS) on 6 January 2015 released expanded transfer pricing guidance in the form of a substantive e-Tax Guide—Transfer Pricing Guidelines (Second Edition).

Related content

The e-Tax Guide consolidates and expands earlier transfer pricing guidance, and elaborates on a number of transfer pricing items and concepts. The guidance is an amalgamation and expansion of previous IRAS transfer pricing guidance, and is supported by certain sections of the Singapore Income Tax Act, including Section 34D (Transactions not at arm’s length), as well as sections 32 and 53. 




The transfer pricing guidance elaborates on a number of transfer pricing items and concepts, as well as IRAS viewpoints as to how they are to be treated by taxpayers, including:

  • When (definition of "contemporaneous") and how transfer pricing documentation is to be prepared
  • Preparation of transfer pricing analysis and additional information to be included in transfer pricing documentation (e.g., more value-chain oriented information on intangibles, etc.)
  • Insights on the use of various transfer pricing methods and profit level indicators (e.g., Berry Ratio)
  • Certain low thresholds, or under certain circumstances, for domestic transactions between two Singapore taxpayers with the same tax rate
  • Safe harbour cost plus mark-up (albeit only for a short prescribed list of routine support services and subject to certain conditions)
  • Transfer pricing audit and selection of taxpayers for audit
  • Penalties and other adverse implications for non-compliance and inadequate documentation
  • IRAS view and treatment of year-end, corresponding, compensating, retrospective adjustments (depending on whether upwards or downwards)
  • Other administrative procedures and requirements for Mutual Agreement Procedures (MAPs) and advance pricing arrangements (APAs)

Even if the transaction is exempted from documentation, it still must be compliant with the arm’s length pricing. 

KPMG observation

It appears that the IRAS intends to foster greater transfer pricing compliance, not only through clarification of its expectations, but also through reminders of its audit program and penalties for non-compliance. On the other hand, the IRAS recognises the need to reduce the compliance burden for taxpayers with small related-party transactions or transactions with little risk of tax leakages. As a next step, it will be important for companies to review their transfer pricing compliance and whether their existing documentation is adequate, given the expanded requirements. Accordingly, companies with significant related-party transactions will need to evaluate the extent of their transfer pricing compliance in a systematic manner. 

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