Transfer Pricing

Common questions about transfer pricing in Singapore, answered by the team at E&H Corporate Services.

Is Transfer Pricing Documentation mandatory in Singapore?Transfer pricing documentation is not filed with IRAS routinely, but it must be prepared and retained if your related-party transactions exceed S$1 million in a year. IRAS may request it during audits — failure to maintain it can result in penalties.Who is required to prepare transfer pricing documentation?Companies whose annual revenue is at least S$10 million for each financial year and the related party transactions value (excluding loans) exceed S$1 million whereas for loan, the transaction value must exceed S$1.5 million.What is the threshold to prepare transfer pricing documentation?Companies whose annual revenue is at least S$10 million for each financial year and the related party transactions value (excluding loans) exceed S$1 million whereas for loan, the transaction value must exceed S$1.5 million.What is contemporaneous transfer pricing documentation?Contemporaneous documentation is prepared at or around the time the related-party transactions occur, rather than after the fact. It evidences that prices were set at arm's length using the appropriate method, and IRAS considers it more reliable.When to refresh transfer pricing documentation?Taxpayers may update their transfer pricing documentation once every three years as long as the information is still accurate.What are the deadlines for preparing transfer pricing reports?Not later than the filing due date of the tax return (30 November)What is the penalty for not preparing or retaining transfer pricing documentation?IRAS can impose a penalty of up to S$10,000 plus S$100 per day for failure to provide transfer pricing documentation, and the absence of documentation can also trigger additional tax assessments with penalties of up to 200% for non-arm's length pricing.When are related party transactions exempted?Related-party transactions are exempt from transfer pricing documentation if the total value is below S$1 million per year. Certain transactions (e.g. those with no tax impact, or loans at arm's length rates) may also be excluded from the documentation requirement.When are entities said to be related in transfer pricing?Entities are related when one controls the other or both are under common control — through shareholding (>50%), voting rights, or de facto control. Transactions between related parties must be priced at arm's length.Does IRAS have a preference of Transfer Pricing Method?IRAS does not prescribe a single method. It accepts the five OECD methods (CUP, resale price, cost plus, transactional net margin, profit split) and requires you to select the most appropriate method based on the transaction's facts, applying the arm's length principle.Is there a surcharge on Transfer Pricing adjustments made by IRAS?Yes. Where IRAS makes a transfer pricing adjustment, a surcharge of 5% of the adjustment amount applies on top of any additional tax, unless the taxpayer had prepared adequate documentation and disclosed the position.How does Transfer Pricing work in Singapore?Transfer pricing requires related-party transactions (sales, services, loans, IP royalties) to be priced as if between independent parties (the arm's length principle). Companies must apply an appropriate method, prepare documentation above S$1 million, and keep records for IRAS review.

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