Comprehensive Guide to Singapore Transfer Pricing Documentation
As a mandatory requirement by IRAS under section 34F of the Singapore Income Tax Act, the Transfer Pricing Documentation is significant for taxpayers.
Taxpayers are required to keep records to prove that their related party transactions are always conducted at arm’s length.
Applicable from Year of Assessment (YA) 2019 onwards, here’s everything you need to know about the mandatory Transfer Pricing Documentation in Singapore.
What is Transfer Pricing?
Transfer pricing refers to the pricing of goods, services and intangibles between related parties. The arm’s length principle has to be adopted for determining the pricing of transactions between related parties. Taxpayers should prepare and keep contemporaneous Transfer Pricing Documentation to show that their related party transactions are conducted at arm’s length.
What is contemporaneous Transfer Pricing Documentation?
Contemporaneous Transfer Pricing Documentation refers to documentation and information that taxpayers have relied upon to determine the pricing of a related party transaction, prior to or at the time of undertaking the transactions with related parties.
The IRAS also accepts Transfer Pricing Documentation as contemporaneous when it has been prepared not later than the due date of filing of the annual tax return for the financial year in which the transactions took place.
Is it mandatory to prepare Transfer Pricing Documentation for a Singapore Company from Year of Assessment 2019?
In 2018, the IRAS made it mandatory for a Singapore Company to prepare Transfer Pricing Documentation. A new section i.e. Section 34F was inserted in the Income Tax Act and is applicable from YA 2019 and every subsequent year of assessment.
What is the threshold to prepare Transfer Pricing Documentation for a Singapore Company?
As per Section 34F, a Singapore entity is required to prepare Transfer Pricing Documentation for a particular financial year, if either of the following conditions are met:
Gross revenue of the Singapore entity exceeds SG$10million; or
The Singapore entity was required to prepare Transfer Pricing Documentation in the previous financial year.
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