Transfer pricing in Singapore

TP documentation must be completed prior to the tax return filing deadline for the YA. The relevant legislation stipulates detailed content requirements for TP documentation, summarised as follows (note that this summary is not exhaustive):

• An overview of the group’s businesses that are relevant to the business operations in Singapore, detailing the group’s global business, organisation structure, the nature of global business operations and overall TP policies.
• Specific details of the taxpayer’s business in Singapore, including descriptions of the business operations, related party transactions, and TP analysis to ascertain whether the conditions made or imposed are in accordance with the arm’s length conditions.

Non-compliance with the requirements can result in a penalty not exceeding SGD 10,000. The following are instances of non-compliance: 

• Failing to complete TP documentation by the time of the making of the tax return;
• Not preparing TP documentation based on the content requirements prescribed under the legislation;
• Failing to retain the TP documentation for a period of 5 years;
• Not submitting the TP documentation within 30 days of a written request by the IRAS; or
• Providing any documentation or information that the taxpayer knows to be false or misleading.

It is crucial to recognise that exemption from preparing comprehensive TP documentation does not exempt taxpayers from IRAS scrutiny. IRAS may still request supporting documents to verify the arm’s length nature of related party transactions or to make a TP adjustment.

Consequently, maintaining adequate records is essential to ensure preparedness for any inquiries or audits conducted by the IRAS.