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Singapore Publishes Revised Transfer Pricing Guidelines — Orbitax Tax News & Alerts

The Inland Revenue Authority of Singapore (IRAS) has published Revised e-Tax Guide - Transfer Pricing Guidelines (Sixth Edition). The main amendments made by the IRAS are summarized as follows:

  • Enhanced the guidance on application of Berry ratio and value-added cost mark-up – paragraphs 5.99, 5.101 and 5.102;
  • Added frequently asked questions regarding preparation of TP documentation in Appendix B of section 6;
  • Re-named Part II from "Transfer pricing administration" to "Transfer pricing compliance" which contains:
    • Existing section 7 with "transfer pricing consultation" being updated to "transfer pricing audit";
    • New section 8 to cover previous paragraphs 5.117 to 5.124 on arm's length adjustment by IRAS; and
    • New section 9 to cover previous section 15 on surcharge and penalty with additional guidance on remission of surcharge;
  • Inserted a new Part III – Dispute Prevention and Resolution which contains previous sections 8 to 10 now renumbered to sections 10 to 12. Amendment to section 10 includes:
    • Re-arranging the paragraphs;
    • Providing additional guidance on arbitration and circumstances under which IRAS will not accept an APA application; and
    • Providing frequently asked questions regarding APA application;
  • Renamed "Part III – Other Issues" to "Part IV – Other Matters" which contains:
    • Previous sections 11 to 14 now renumbered to sections 13 to 16; and
    • New section 17 on cost contribution arrangements;
  • Amended section 14 to include guidance on:
    • Shareholder activities;
    • Duplicative service; and
    • OECD simplified approach for low value-adding intra-group services;
  • Amended section 15 to include:
    • Guidance on pricing related party financial transactions, besides related party loans; and
    • Additional guidance on pricing related party loans which includes determining whether a purported loan should be regarded as a loan, risk-free return, credit rating of borrower and effect of group membership;
  • Inserted a new section 18 to cover other guidance relating to transfer pricing, which lists other relevant e-Tax guides:

The revised guidance and additions are all generally in line with the OECD Transfer Pricing Guidelines.