Singapore Inland Revenue Authority published transfer pricing documentation rules and transfer pricing guidelines in February 2018. The major expansions of the transfer pricing rules are as follows:
- The arm’s length principle is aligned with the OECD standard, and the tax authority may make adjustments to related-party transactions if such transactions would not be entered into by unrelated parties under comparable circumstances.
- The form of related-party dealings can be disregarded if inconsistent with the substance of the transaction or there is a lack commercial rationality (also known as “recharacterization”).
- A 5% “surcharge” is to be applied to the amount of transfer pricing adjustments made by the tax authority.
- Taxpayers must prepare and maintain transfer pricing documentation (pursuant to the transfer pricing documentation rules), and may be subject to penalties for failing to submit the documentation within 30 days of a request from the tax authority.
