- Updated
- July 2025
- Sections
- 15
- Questions
- 47
Key Facts
Core Framework
Arm’s length principle is provided under Section 34D of the Income Tax Act 1947 Surcharge is provided under Section 34E of the Income Tax Act 1947 Income Tax Act 1947 is available at this link Income Tax (Transfer Pricing Documentation) Rules 2018 are available at this link Singapore Transfer Pricing Guidelines are available at this link Singapore Transfer Pricing Guidelines (Special Topic) – Commodity Marketing and Trading Activities are available at this link Singapore Transfer Pricing Guidelines (Special Topic) – Centralised Activities in Multinational Enterprise Groups are available at this link
Taxpayers are required to comply with the arm’s length principle. If they fail to do so, they are subject to a surcharge based on 5% of the transfer pricing adjustment made by the Comptroller. Singapore’s domestic transfer pricing framework includes: 1. Domestic tax law on complying with the arm’s length principle and transfer pricing documentation requirement as provided in the Income Tax Act 1947. 2. Rules on preparing transfer pricing documentation as provided in the Income Tax (Transfer Pricing Documentation) Rules 2018. 3. Guidelines on complying with the arm’s length principle and transfer pricing documentation requirement as provided in the Singapore Transfer Pricing Guidelines. In addition, there are Guidelines on specific topics: a) Singapore Transfer Pricing Guidelines (Special Topic) – Commodity Marketing and Trading Activities
Singapore Transfer Pricing Guidelines
Singapore generally takes guidance from the OECD Transfer Pricing Guidelines. This is mentioned in the Singapore Transfer Pricing Guidelines which largely follow the key principles laid down in the OECD Transfer Pricing Guidelines. The Singapore Transfer Pricing Guidelines help taxpayers in Singapore on complying with the arm’s length principle and transfer pricing documentation requirement when transacting with their related parties and lay down expectations and practices that are specifically relevant to them, for example: 1) The process to observe when making an application for advance pricing arrangement and mutual agreement procedure (see item 33 below). 2) The simplification measures, such as 5% mark-up for routine support services (see item 24 below) and the indicative margin for related party loans (see item 39 below) which taxpayers in Singapore can choose to apply. 3) The circumstances under which year-end true up adjustments are allowable under the domestic tax law (see items 40 and 41 below).
Section 5 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover comparability analysis. In addition, Singapore takes guidance from the OECD Transfer Pricing Guidelines.
Section 5 of the Singapore Transfer Pricing Guidelines
As far as possible, taxpayers are to use local comparables in their comparability analysis. When taxpayers are unable to find sufficient reliable local comparables, they may expand their search to regional comparables. Taxpayers are to include the basis of selecting the comparables in their transfer pricing documentation.
Section 5 of the Singapore Transfer Pricing Guidelines
The use of a range of prices or margins is acceptable. The Singapore Transfer Pricing Guidelines provide that: • A wide range of prices or margins may suggest the existence of comparability issues or defects that cannot be identified and/ or quantified in the comparability analysis. In such a situation where comparability adjustment is not possible, to enhance the reliability of the comparability analysis, outliers such as the minimum and maximum data points should be excluded and taxpayers are to apply the interquartile range to determine the arm’s length remuneration. • A full range (i.e. from minimum to maximum) may occasionally be considered as the arm’s length price range when all the points in the range can be established to be equally reliable. An example of such a circumstance is where the taxpayer has applied the CUP method and demonstrated that all observations in the full range are equally reliable.
Documentation
Transfer pricing documentation - Section 34F of the Income Tax Act 1947 - Income Tax (Transfer Pricing Documentation) Rules 2018 - Section 6 of the Singapore Transfer Pricing Guidelines
The domestic tax law requires taxpayers with gross revenue from their trade or business exceeding SGD 10 million to prepare transfer pricing documentation unless they are exempt from doing so (see item 32 below). The transfer pricing documentation must contain information at Entity level and Group level as prescribed under the Income Tax (Transfer Pricing Documentation) Rules 2018. The prescribed information at Entity level and Group level is largely similar to the OECD Local file and Master file respectively. If taxpayers have prepared similar transfer pricing documentation (for example, OECD master file and local file) for the purpose of complying with the requirements of other tax jurisdictions, such documentation, if relevant to the business operations in Singapore, may form part of the transfer pricing documentation for Singapore tax purposes. Taxpayers are encouraged to prepare transfer pricing documentation even if they are not required to do so to better manage their transfer pricing risk. The requirement for Country-by-Country Report (“CbCR”) is provided under the domestic tax law and subsidiary legislation.
Transfer pricing documentation - Section 34F of the Income Tax Act 1947 - Income Tax (Transfer Pricing Documentation) Rules 2018 - Section 6 of the Singapore Transfer Pricing Guidelines
The domestic tax law requires taxpayers with gross revenue from their trade or business exceeding SGD 10 million to prepare transfer pricing documentation unless they are exempt from doing so (see item 32 below). The transfer pricing documentation must contain information at Entity level and Group level as prescribed under the Income Tax (Transfer Pricing Documentation) Rules 2018. The prescribed information at Entity level and Group level is largely similar to the OECD Local file and Master file respectively. If taxpayers have prepared similar transfer pricing documentation (for example, OECD master file and local file) for the purpose of complying with the requirements of other tax jurisdictions, such documentation, if relevant to the business operations in Singapore, may form part of the transfer pricing documentation for Singapore tax purposes. Taxpayers are encouraged to prepare transfer pricing documentation even if they are not required to do so to better manage their transfer pricing risk. The requirement for Country-by-Country Report (“CbCR”) is provided under the domestic tax law and subsidiary legislation.
Transfer pricing documentation - Section 34F of the Income Tax Act 1947 - Income Tax (Transfer Pricing Documentation) Rules 2018 - Section 6 of the Singapore Transfer Pricing Guidelines
The domestic tax law requires taxpayers with gross revenue from their trade or business exceeding SGD 10 million to prepare transfer pricing documentation unless they are exempt from doing so (see item 32 below). The transfer pricing documentation must contain information at Entity level and Group level as prescribed under the Income Tax (Transfer Pricing Documentation) Rules 2018. The prescribed information at Entity level and Group level is largely similar to the OECD Local file and Master file respectively. If taxpayers have prepared similar transfer pricing documentation (for example, OECD master file and local file) for the purpose of complying with the requirements of other tax jurisdictions, such documentation, if relevant to the business operations in Singapore, may form part of the transfer pricing documentation for Singapore tax purposes. Taxpayers are encouraged to prepare transfer pricing documentation even if they are not required to do so to better manage their transfer pricing risk. The requirement for Country-by-Country Report (“CbCR”) is provided under the domestic tax law and subsidiary legislation.
Section 34F and Section 105M of the Income Tax Act 1947
Taxpayers which do not comply with the transfer pricing documentation requirements shall be liable to a fine not exceeding SGD 10,000 under Section 34F of the Income Tax Act 1947. Taxpayers which do not comply with the CbCR requirements shall be liable to fine of varying amount depending on the offence under Section 105M of the Income Tax Act 1947.
TP Methods
- CUP
- Resale Price
- Cost Plus
- TNMM
- Profit Split
- Other
Selection: Most appropriate method
Dispute Resolution
Sections 10 to 12 of the Singapore Transfer Pricing Guidelines
Taxpayers may apply for a MAP and an APA as provided in the relevant Avoidance of Double Taxation Agreements (“DTAs”) for bilateral and multilateral APA or the domestic tax law for unilateral APA. When applying for a MAP or an APA, taxpayers are to observe the process sets out in the Singapore Transfer Pricing Guidelines. The process covers who can apply, when to apply and how to apply for a MAP or an APA, etc. Information relating to the process has also been provided in the Singapore’s MAP profile. Generally, an APA covers three to five future financial years (“covered period”) and no more than two prior years (“roll-back years”) provided there is no significant difference in the facts and circumstances between the covered period and the roll-back years. No roll-back year is allowed for unilateral APA. Singapore has been participating in the ICAP since 2021 to provide tax certainty to taxpayers.
Sections 10 to 12 of the Singapore Transfer Pricing Guidelines
Taxpayers may apply for a MAP and an APA as provided in the relevant Avoidance of Double Taxation Agreements (“DTAs”) for bilateral and multilateral APA or the domestic tax law for unilateral APA. When applying for a MAP or an APA, taxpayers are to observe the process sets out in the Singapore Transfer Pricing Guidelines. The process covers who can apply, when to apply and how to apply for a MAP or an APA, etc. Information relating to the process has also been provided in the Singapore’s MAP profile. Generally, an APA covers three to five future financial years (“covered period”) and no more than two prior years (“roll-back years”) provided there is no significant difference in the facts and circumstances between the covered period and the roll-back years. No roll-back year is allowed for unilateral APA. Singapore has been participating in the ICAP since 2021 to provide tax certainty to taxpayers.
Simplifications
Income Tax (Transfer Pricing Documentation) Rules 2018 Sections 14 and 15 of the Singapore Transfer Pricing Guidelines
In addition to the 5% cost mark-up for routine support services mentioned in item 24 above, Singapore has the following simplification measures: 1) Use of indicative margin published yearly on IRAS website to derive interest rate. Taxpayers simply add the indicative margin to their choice of an appropriate base reference rate to derive the interest rate. The purpose of the indicative margin is to ease taxpayers’ compliance effort in determining the credit margin for bearing the credit risk of default by the borrower. 2) No cost mark-up for cost-pooling arrangement. A service provider may charge its related party for its proportionate share of the cost of services without a mark-up under a cost-pooling arrangement on the conditions that: a) Each participant’s share of the costs must be borne in the form of cash or other monetary contributions; b) The services are not provided to any unrelated party; c) The provision of services to the related parties is not the service provider’s principal activity, i.e. the costs of providing the services do not exceed 15% of the service provider’s total expenses; d) The services fall within the list of routine support services prescribed under the Income Tax (Transfer Pricing Documentation) Rules 2018; and e) There is transfer pricing documentation for the arrangement. 3) No cost mark-up for pass-through cost. A service provider may pass on the costs of services that it acquired from other service providers (whether independent or related) to its related parties without a mark-up on the conditions that: a) The acquired services are for the benefit of the related parties; b) The acquired services have been charged at arm’s length; c) The group service provider is merely the paying agent and does not enhance the value of the acquired services; and d) The liabilities relating to the acquired services are assumed by the related parties.
The application of the simplified and streamlined approach for baseline marketing and distribution activities is under consideration.
Special Topics
Section 19B and Section 34D of the Income Tax Act 1947
The Income Tax Act 1947 requires that the capital expenditure incurred for intellectual property rights for the purpose of writing-down allowances must be based on open-market price (Section 19B) and related party transactions, including those involving intangibles, must be conducted at arm’s length (Section 34D). In addition, Singapore takes guidance from Chapter VI of the OECD Transfer Pricing Guidelines.
As mentioned under item 12 above, the Income Tax Act 1947 requires that the capital expenditure incurred for intellectual property rights for the purpose of writing-down allowances must be based on open-market price (Section 19B) and related party transactions involving intangibles must be conducted at arm’s length (Section 34D). In the event that such intellectual property rights or intangibles are HTVI, Singapore would take guidance from Section D.4 and Annex II of Chapter VI of the OECD Transfer Pricing Guidelines.
Section 14 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover transfer pricing specific to intra-group services transactions. In addition, Singapore takes guidance from Chapter VII of the OECD Transfer Pricing Guidelines.
Section 15 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover transfer pricing specific to financial transactions. Reference is made to Chapter X of the OECD Transfer Pricing Guidelines.
Full OECD Questionnaire
Legal ReferenceArm’s length principle is provided under Section 34D of the Income Tax Act 1947 Surcharge is provided under Section 34E of the Income Tax Act 1947 Income Tax Act 1947 is available at this link Income Tax (Transfer Pricing Documentation) Rules 2018 are available at this link Singapore Transfer Pricing Guidelines are available at this link Singapore Transfer Pricing Guidelines (Special Topic) – Commodity Marketing and Trading Activities are available at this link Singapore Transfer Pricing Guidelines (Special Topic) – Centralised Activities in Multinational Enterprise Groups are available at this link
Taxpayers are required to comply with the arm’s length principle. If they fail to do so, they are subject to a surcharge based on 5% of the transfer pricing adjustment made by the Comptroller. Singapore’s domestic transfer pricing framework includes: 1. Domestic tax law on complying with the arm’s length principle and transfer pricing documentation requirement as provided in the Income Tax Act 1947. 2. Rules on preparing transfer pricing documentation as provided in the Income Tax (Transfer Pricing Documentation) Rules 2018. 3. Guidelines on complying with the arm’s length principle and transfer pricing documentation requirement as provided in the Singapore Transfer Pricing Guidelines. In addition, there are Guidelines on specific topics: a) Singapore Transfer Pricing Guidelines (Special Topic) – Commodity Marketing and Trading Activities
Legal ReferenceSingapore Transfer Pricing Guidelines
Singapore generally takes guidance from the OECD Transfer Pricing Guidelines. This is mentioned in the Singapore Transfer Pricing Guidelines which largely follow the key principles laid down in the OECD Transfer Pricing Guidelines. The Singapore Transfer Pricing Guidelines help taxpayers in Singapore on complying with the arm’s length principle and transfer pricing documentation requirement when transacting with their related parties and lay down expectations and practices that are specifically relevant to them, for example: 1) The process to observe when making an application for advance pricing arrangement and mutual agreement procedure (see item 33 below). 2) The simplification measures, such as 5% mark-up for routine support services (see item 24 below) and the indicative margin for related party loans (see item 39 below) which taxpayers in Singapore can choose to apply. 3) The circumstances under which year-end true up adjustments are allowable under the domestic tax law (see items 40 and 41 below).
Legal ReferenceSection 2 of the Income Tax Act 1947
Related party is defined as follows: Related party, in relation to a person (A), means any person — (a) who directly or indirectly controls A; (b) who is being controlled directly or indirectly by A; or (c) who, together with A, is directly or indirectly under the control of a common person Person is defined to include a company, body of persons and a Hindu joint family. Control is not defined and there is no control or ownership threshold provided in the domestic tax law for purpose of determining related party.
Legal ReferenceSection 5 of the Singapore Transfer Pricing Guidelines
There are no provisions for transfer pricing methods in the domestic tax law. However, the Singapore Transfer Pricing Guidelines set out the transfer pricing methods that taxpayers can use to price their related party transactions. The Guidelines provide for all methods described in the OECD Transfer Pricing Guidelines. As for “Other” in the above table, the Singapore Transfer Pricing Guidelines provide that taxpayers may choose other more appropriate methods or use a combination of various methods to comply with the arm’s length principle. Whichever method the taxpayers choose, transfer pricing documentation must be maintained to demonstrate that their transfer prices are established in accordance with the arm’s length principle. This approach is consistent with paragraph 2.9 of the OECD Transfer Pricing Guidelines.
- CUP (provided)
- Resale Price (provided)
- Cost Plus (provided)
- TNMM (provided)
- Profit Split (provided)
- Other (provided)
Legal ReferenceSection 5 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover selecting the most appropriate method to determine the arm’s length price for a related party transaction. In addition, Singapore takes guidance from the OECD Transfer Pricing Guidelines.
- Hierarchy of methods (not selected)
- Most appropriate method (selected)
- Other (if so, please explain) (not selected)
Legal ReferenceSingapore Transfer Pricing Guidelines (Special Topic) – Commodity Marketing and Trading Activities
The Singapore Transfer Pricing Guidelines (Special Topic) – Commodity Marketing and Trading Activities analyse the economic value of taxpayers’ commodity marketing and trading activities in Singapore and help taxpayers on complying with the arm’s length principle and transfer pricing documentation requirement when such activities are carried out with their related parties. The Guidelines make reference to the guidance contained in paragraphs 2.18 to 2.22 of the OECD Transfer Pricing Guidelines.
Legal ReferenceSection 5 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover comparability analysis. In addition, Singapore takes guidance from the OECD Transfer Pricing Guidelines.
Legal ReferenceSection 5 of the Singapore Transfer Pricing Guidelines
As far as possible, taxpayers are to use local comparables in their comparability analysis. When taxpayers are unable to find sufficient reliable local comparables, they may expand their search to regional comparables. Taxpayers are to include the basis of selecting the comparables in their transfer pricing documentation.
Legal ReferenceSection 5 of the Singapore Transfer Pricing Guidelines
The use of a range of prices or margins is acceptable. The Singapore Transfer Pricing Guidelines provide that: • A wide range of prices or margins may suggest the existence of comparability issues or defects that cannot be identified and/ or quantified in the comparability analysis. In such a situation where comparability adjustment is not possible, to enhance the reliability of the comparability analysis, outliers such as the minimum and maximum data points should be excluded and taxpayers are to apply the interquartile range to determine the arm’s length remuneration. • A full range (i.e. from minimum to maximum) may occasionally be considered as the arm’s length price range when all the points in the range can be established to be equally reliable. An example of such a circumstance is where the taxpayer has applied the CUP method and demonstrated that all observations in the full range are equally reliable.
Legal ReferenceSection 5 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover comparability adjustments. Taxpayers are not required to make comparability adjustments unless such adjustment improves the reliability of the comparables and can be made reasonably accurately.
Legal ReferenceSection 19B and Section 34D of the Income Tax Act 1947
The Income Tax Act 1947 requires that the capital expenditure incurred for intellectual property rights for the purpose of writing-down allowances must be based on open-market price (Section 19B) and related party transactions, including those involving intangibles, must be conducted at arm’s length (Section 34D). In addition, Singapore takes guidance from Chapter VI of the OECD Transfer Pricing Guidelines.
Singapore takes guidance from Chapter VI of the OECD Transfer Pricing Guidelines.
As mentioned under item 12 above, the Income Tax Act 1947 requires that the capital expenditure incurred for intellectual property rights for the purpose of writing-down allowances must be based on open-market price (Section 19B) and related party transactions involving intangibles must be conducted at arm’s length (Section 34D). In the event that such intellectual property rights or intangibles are HTVI, Singapore would take guidance from Section D.4 and Annex II of Chapter VI of the OECD Transfer Pricing Guidelines.
Singapore takes guidance from Section D.4 and Annex II of Chapter VI of the OECD Transfer Pricing Guidelines.
No. Singapore takes guidance from Section D.4 and Annex II of Chapter VI of the OECD Transfer Pricing Guidelines.
Legal ReferenceSection 74 of the Income Tax Act 1947
Singapore has a statute of limitation of four years to make assessments to raise additional tax. The statute of limitation applies regardless of the kinds of transactions. There is no statute of limitation to make assessments to discharge or reduce tax or where fraud or wilful default has been committed.
Legal ReferenceSections 10 and 12 of the Singapore Transfer Pricing Guidelines
Taxpayers can request a bilateral or multilateral advance pricing agreement (“APA”) for transactions falling within the scope of the HTVI approach so long as it is permitted under the relevant treaty and taxpayers have complied with the APA process stated in the Singapore Transfer Pricing Guidelines.
Training of tax administrators and taking guidance from the OECD Transfer Pricing Guidelines.
Legal ReferenceSection 74(2A) of the Income Tax Act 1947
The statute of limitation of four years mentioned in item 17 above does not apply to assessments made to effect the corresponding adjustments agreed under a MAP agreement with a foreign tax authority. As such, Singapore is able to make corresponding adjustments under the HTVI approach in their respective years (both closed and open years).
In general, as long as the adjustments are made within the statute of limitation, the domestic tax law does not prevent Singapore from making several adjustments for a single transaction. However, as good practice and to give certainty to our taxpayers, Singapore endeavours to avoid making several adjustments to a single transaction.
Legal ReferenceSection 14 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover transfer pricing specific to intra-group services transactions. In addition, Singapore takes guidance from Chapter VII of the OECD Transfer Pricing Guidelines.
Legal ReferenceIncome Tax (Transfer Pricing Documentation) Rules 2018 Section 14 of the Singapore Transfer Pricing Guidelines
Taxpayers can choose to apply the 5% cost mark-up for routine support services as an alternative to performing detailed transfer pricing analysis provided: a) The services fall within the list of routine support services prescribed under the Income Tax (Transfer Pricing Documentation) Rules 2018; b) The service provider does not offer the same routine support services to an unrelated party; and c) All costs including direct, indirect and operating costs relating to the routine support services performed are taken into account in computing the 5% cost mark-up. In the event the service does not fall within the prescribed list of routine support services as required under (a) above, taxpayers may apply the 5% profit mark-up under the OECD simplified approach on low value-adding intra-group services in Chapter VII of the OECD Transfer Pricing Guidelines provided: a) The service met the definition of low value-adding intra-group services for the OECD simplified approach; b) The service is not specifically excluded as low value-adding intra-group service for the OECD simplified approach; c) The tax authority of the other party to the service has similarly adopted the OECD simplified approach; d) The service provider does not offer the same service to an unrelated party; and e) All costs including direct, indirect and operating costs relating to the service performed are taken into account in computing the 5% profit mark-up.
Legal ReferenceSection 15 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover transfer pricing specific to financial transactions. Reference is made to Chapter X of the OECD Transfer Pricing Guidelines.
Legal ReferenceSection 17 of the Singapore Transfer Pricing Guidelines
The Singapore Transfer Pricing Guidelines cover transfer pricing specific to cost contribution arrangements. Reference is made to Chapter VIII of the OECD Transfer Pricing Guidelines.
Legal ReferenceTransfer pricing documentation - Section 34F of the Income Tax Act 1947 - Income Tax (Transfer Pricing Documentation) Rules 2018 - Section 6 of the Singapore Transfer Pricing Guidelines
The domestic tax law requires taxpayers with gross revenue from their trade or business exceeding SGD 10 million to prepare transfer pricing documentation unless they are exempt from doing so (see item 32 below). The transfer pricing documentation must contain information at Entity level and Group level as prescribed under the Income Tax (Transfer Pricing Documentation) Rules 2018. The prescribed information at Entity level and Group level is largely similar to the OECD Local file and Master file respectively. If taxpayers have prepared similar transfer pricing documentation (for example, OECD master file and local file) for the purpose of complying with the requirements of other tax jurisdictions, such documentation, if relevant to the business operations in Singapore, may form part of the transfer pricing documentation for Singapore tax purposes. Taxpayers are encouraged to prepare transfer pricing documentation even if they are not required to do so to better manage their transfer pricing risk. The requirement for Country-by-Country Report (“CbCR”) is provided under the domestic tax law and subsidiary legislation.
- Master file consistent with Annex I to Chapter V of the TPG (selected)
- Local file consistent with Annex II to Chapter V of the TPG (selected)
- Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
- Specific transfer pricing returns (separate or annexed to the tax return) (selected)
- Other (specify) (selected)
Legal ReferenceTransfer pricing documentation - Section 34F of the Income Tax Act 1947 - Income Tax (Transfer Pricing Documentation) Rules 2018 - Section 6 of the Singapore Transfer Pricing Guidelines CBCR: - Part 20B of the Income Tax Act 1947 - Income Tax (International Tax Compliance Agreements) (Country-By-Country Reporting) Regulations 2018 - IRAS e-Tax Guide on Country-by-Country Reporting is available at this link
Singapore adopted the three-tiered approach to transfer pricing documentation, i.e. a) Transfer pricing documentation at Group level which is largely similar to the OECD Master file, b) Transfer pricing documentation at Entity level which is largely similar to the OECD Local file, and c) CbCR which is largely similar to the OECD CbCR, including the filing and notification process. The transfer pricing documentation must be prepared in English (or translated to English) no later than the time for the making of the tax return for the financial year in which the transaction takes place. It must be submitted within 30 days upon request by the Inland Revenue Authority of Singapore (“IRAS”). Taxpayers must retain the transfer pricing documentation for at least five years from the year in which the transaction took place.
Legal ReferenceSection 34F and Section 105M of the Income Tax Act 1947
Taxpayers which do not comply with the transfer pricing documentation requirements shall be liable to a fine not exceeding SGD 10,000 under Section 34F of the Income Tax Act 1947. Taxpayers which do not comply with the CbCR requirements shall be liable to fine of varying amount depending on the offence under Section 105M of the Income Tax Act 1947.
Legal ReferenceSection 34F of the Income Tax Act 1947 Income Tax (Transfer Pricing Documentation) Rules 2018 Section 6 of the Singapore Transfer Pricing Guidelines
Exemption from transfer pricing documentation is provided under the domestic law and prescribed in the Income Tax (Transfer Pricing Documentation) Rules 2018. The following related party transactions are exempt from transfer pricing documentation: 1) related party domestic transaction subject to the same tax rate, 2) related party loan where the indicative margin is applied (see item 39 below), 3) routine support services where the 5% cost mark-up is applied (see item 24 above), 4) related party transaction covered by an advance pricing arrangement and 5) related party transaction not exceeding certain value. The Singapore Transfer Pricing Guidelines explain the exemption.
Legal ReferenceSections 10 to 12 of the Singapore Transfer Pricing Guidelines
Taxpayers may apply for a MAP and an APA as provided in the relevant Avoidance of Double Taxation Agreements (“DTAs”) for bilateral and multilateral APA or the domestic tax law for unilateral APA. When applying for a MAP or an APA, taxpayers are to observe the process sets out in the Singapore Transfer Pricing Guidelines. The process covers who can apply, when to apply and how to apply for a MAP or an APA, etc. Information relating to the process has also been provided in the Singapore’s MAP profile. Generally, an APA covers three to five future financial years (“covered period”) and no more than two prior years (“roll-back years”) provided there is no significant difference in the facts and circumstances between the covered period and the roll-back years. No roll-back year is allowed for unilateral APA. Singapore has been participating in the ICAP since 2021 to provide tax certainty to taxpayers.
- Rulings (not selected)
- Enhanced engagement or cooperative compliance programmes (selected)
- Advance Pricing Agreements (APA) (selected)
- Unilateral APAs (selected)
- Bilateral APAs (selected)
- Multilateral APAs (selected)
- International Compliance Assurance Programme (ICAP) (selected)
- Mutual Agreement Procedures (selected)
- Other (please specify) (not selected)
The application of the simplified and streamlined approach for baseline marketing and distribution activities is under consideration.
The application of the simplified and streamlined approach for baseline marketing and distribution activities is under consideration.
- In-scope tested parties resident within the jurisdiction can elect to apply the simplified and streamlined approach (i.e. safe harbour) (not selected)
- In-scope tested parties resident within the jurisdiction are required to follow the simplified and streamlined approach... (not selected)
- N/A (selected)
The application of the simplified and streamlined approach for baseline marketing and distribution activities is under consideration.
- 20% (not selected)
- 30% (not selected)
- Other (please specify) (not selected)
- N/A (selected)
The application of the simplified and streamlined approach for baseline marketing and distribution activities is under consideration.
Legal ReferenceIncome Tax (Transfer Pricing Documentation) Rules 2018 Sections 14 and 15 of the Singapore Transfer Pricing Guidelines
In addition to the 5% cost mark-up for routine support services mentioned in item 24 above, Singapore has the following simplification measures: 1) Use of indicative margin published yearly on IRAS website to derive interest rate. Taxpayers simply add the indicative margin to their choice of an appropriate base reference rate to derive the interest rate. The purpose of the indicative margin is to ease taxpayers’ compliance effort in determining the credit margin for bearing the credit risk of default by the borrower. 2) No cost mark-up for cost-pooling arrangement. A service provider may charge its related party for its proportionate share of the cost of services without a mark-up under a cost-pooling arrangement on the conditions that: a) Each participant’s share of the costs must be borne in the form of cash or other monetary contributions; b) The services are not provided to any unrelated party; c) The provision of services to the related parties is not the service provider’s principal activity, i.e. the costs of providing the services do not exceed 15% of the service provider’s total expenses; d) The services fall within the list of routine support services prescribed under the Income Tax (Transfer Pricing Documentation) Rules 2018; and e) There is transfer pricing documentation for the arrangement. 3) No cost mark-up for pass-through cost. A service provider may pass on the costs of services that it acquired from other service providers (whether independent or related) to its related parties without a mark-up on the conditions that: a) The acquired services are for the benefit of the related parties; b) The acquired services have been charged at arm’s length; c) The group service provider is merely the paying agent and does not enhance the value of the acquired services; and d) The liabilities relating to the acquired services are assumed by the related parties.
Legal ReferenceSection 13 of the Singapore Transfer Pricing Guidelines
Legal ReferenceSection 13 of the Singapore Transfer Pricing Guidelines
Singapore will accept year-end adjustments made by taxpayers to ensure that their tax-reported results are consistent with the arm’s length prices stated in their transfer pricing analyses and policies when the following conditions are met: a) Taxpayers must have in place transfer pricing analyses and contemporaneous transfer pricing documentation to establish the arm’s length prices; b) Taxpayers should make the year-end adjustments symmetrically in the accounts of the affected related parties. This is to avoid double taxation or double non-taxation; and c) Taxpayers must make the adjustments before filing their tax returns.
Legal ReferenceA list of Singapore’s treaties is available at the IRAS website (www.iras.gov.sg)
All the Singapore’s treaties contain Article 7 as it read before 2010.
- Article 7 as it read before 2010 (selected)
- Article 7 as it reads after 2010 (not selected)
- Other (please provide additional details) (not selected)
Legal ReferenceSection 16 of the Singapore Transfer Pricing Guidelines
Singapore’s tax treaties do not contain the Article 7 as it reads after 2010. As such, Singapore does not apply the authorised OECD approach (“AOA”). When determining the profits attributable to a permanent establishment (“PE”), Singapore applies the relevant tax treaty and the basic principle that the profits attributable to a PE are those that the PE would have derived if it were a separate and independent enterprise engaged in the same or similar activities under the same or similar conditions (2018 OECD Additional Guidance on the Attribution of Profits to Permanent Establishments referred), together with the Singapore and OECD Transfer Pricing Guidelines.
Legal ReferenceSection 16 of the Singapore Transfer Pricing Guidelines
Singapore applies the approach mentioned in item 44 above. Where the activities performed by a taxpayer for its foreign related party create for the foreign related party a PE in Singapore, Singapore considers no further attribution of profits to the PE on the conditions that: a) The taxpayer receives an arm’s length remuneration from its foreign related party that is commensurate with the functions performed, assets used and risks assumed by the taxpayer; b) The remuneration paid by the foreign related party to the taxpayer is supported by transfer pricing documentation to demonstrate compliance with the arm’s length principle; and c) The foreign related party does not perform any functions, use any assets or assume any risks in Singapore, other than those arising from the activities carried out by the taxpayer.
Legal ReferenceSingapore Transfer Pricing Guidelines (Special Topic) – Centralised Activities in Multinational Enterprise Groups IRAS e-Tax Guide on GST: Transfer Pricing Adjustment is available at this link
The Singapore Transfer Pricing Guidelines (Special Topic) – Centralised Activities in Multinational Enterprise Groups discuss the economic value contributions of centralised activities in Singapore and their importance to a multinational enterprise group. The Guidelines also explain how to analyse such activities carried out in Singapore between related parties, the factors that may affect the transfer price for these activities and the transfer pricing methods that may be appropriate. Singapore also issued a set of guidelines, i.e. Goods and Services Tax (“GST”): Transfer Pricing Adjustment, which explain the GST treatment for adjustments made on the transfer prices of transactions between related parties.
Not applicable
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