Transfer Pricing
Country Summary
Singapore

This document summarizes the transfer pricing requirements and regulations in Singapore. Singapore adheres to the OECD TP Guidelines for transfer pricing. These guidelines exist independently of domestic legislation and provide essential guidance to ensure compliance with the arm’s length principle. The arm’s length principle is defined in section 34D of the Singapore Income Tax Act. The document outlines key aspects of transfer pricing regulations in Singapore, including related party definitions, documentation requirements, audit practices, and penalties for non-compliance.

Overview:

Singapore’s Adherence to OECD TP Guidelines

Singapore follows the OECD TP Guidelines, providing guidance to taxpayers for maintaining compliance with the arm’s length principle, as stipulated in section 34D of the Singapore Income Tax Act.

Regulatory References

Relevant sections of the Singapore Income Tax Act, such as section 34D and section 13(16), are integral to governing transfer pricing in the country.

Definition of Related Party

The definition of related parties includes individuals or entities that exert control directly or indirectly over one another or are under the control of common parties.

Transfer Pricing Documentation

Since fiscal year 2019, taxpayers in Singapore are obligated to submit transfer pricing documentation, especially if their gross revenue exceeds $10 million. The documentation must be filed by the income tax return due date.

Tax Havens & Blacklists

Singapore is considered a tax haven, offering various tax benefits and a low corporate tax rate.

Advance Pricing Agreements (APAs)

Singapore supports APAs, which come in three types: Unilateral, Bilateral, and Multilateral. These agreements serve as essential dispute prevention methods.

Audit Practices

Tax authorities review taxpayers’ transfer pricing documentation to ensure compliance with the arm’s length principle. This process involves fact-finding, discussions, and suggestions for improvement. If transfer prices are not at arm’s length, a surcharge of 5% may be imposed.

Transfer Pricing Documentation

Singapore requires taxpayers to prepare a local Transfer Pricing Documentation (TPD) and Country-by-Country Reporting (CbCR). There’s no separate requirement for a Master file, as some information overlaps with the local TPD. The parent company must submit CbC reports under specific conditions.

Transfer Pricing Methods

Singapore accepts transfer pricing methods outlined in the OECD guidelines, including the Comparable Uncontrolled Price (CUP) method, Resale Price Method (RPM), Cost-Plus Method (CPM), Profit Split Method, and Transactional Net Margin Method (TNMM).

Economic Analysis – Benchmark Study

Benchmark studies are mandatory in Singapore to determine the arm’s length price.

Inter-company Legal Agreement

While an inter-company legal agreement formalizes relationships between group entities, the OECD 2017 Guidelines prioritize the ‘conduct of parties.’

Financial Statements

Taxpayers must disclose their financial statements as part of their transfer pricing documentation.

Production Process for TP Relevant Returns, Documents, Forms, and Financials

A chart outlines filing requirements, formats, deadlines, thresholds, and mandatory languages, highlighting the importance of English in Singapore.

Notification Requirement

Tax authorities inform taxpayers under review, who have 30 days to provide the requested documentation.

Record Keeping

Transfer pricing documentation and records must be retained for at least five years, with penalties for non-compliance.

Penalties and Interest Charges

Non-compliance may result in a fine of up to $10,000.

TPA Global

Diemerhof 42 - Tower 42
1112 XN Diemen
Netherlands