On 23 February 2018, Inland Revenue Authority issued the fifth edition of its transfer pricing guidelines outlining the improvements to the arm’s length principle, adding new transfer pricing documentation requirements, and granting new powers of the Comptroller of Income Tax.
Compulsory documentation is now required under the newly legislated Section 34F of the Singapore Income Tax Act (SITA), and exemptions are also formally codified under the Rules. The new Section 34F introduced in the SITA requires the preparation and maintenance of contemporaneous and adequate TPD with effect from Year of Assessment (YA) 2019 (i.e., financial year ending 2018).
Under the new Section 34F(8), failure to prepare the required TPD constitutes an offence, and the taxpayer is liable to a fine/penalty of up to S$10,000 per offence. Under the Revised TP Guidelines, transfer pricing documentation is based on a three-tiered structure consisting of documentation at the group level, entity level, and country-by-country report (“CbCR”). The new Guidelines contain substantial new/re-write with explicit mention of the making of TP adjustments, such as paragraphs 5.117 to 5.124. The new Section 34E also introduces a new surcharge on any TP adjustment made.
The new guidelines came into effect on 23 February.
