Results of public consultation on transfer pricing documentation

20 January 2015

The Inland Revenue Authority of Singapore (IRAS) received 16 responses on its transfer pricing documentation released for public feedback from 1 to 24 September 2014.

The consultation paper had set out the revised guidance on transfer pricing documentation in the areas of:

  • Objectives of preparing TP documentation
  • Contemporaneous TP documentation
  • Types, extent and compliance matters of TP documentation

A summary of the comments and the IRAS’s responses are as follows:

  1. IRAS to specify the effective date of the guidance and provide taxpayers with adequate time to prepare documentation based on the new standard.

Response: Updated guidelines for TP documentation under section 6 of the Transfer Pricing Guidelines published on 6 January 2015 (2015 guidelines) do not vary significantly from the 2006 guidelines and would not have a significant impact on the taxpayers who have been maintaining TP documentation based on the 2006 guidelines.

  1. IRAS to clarify the interaction between its updated documentation rules and OECD’s proposed three-tier documentation approach (particularly with respect to the OECD’s country-by-country reporting template).

Response: The guidelines set out the types of TP documentation and compliance matters that IRAS expects its taxpayers to observe.

  1. Suggestions received to ease compliance costs such as to restrict information requests to those which are relevant to the Singapore taxpayers’ transactions with their related parties and business activities and to provide explicit guidelines on the frequency of the updating or review of TP guidelines.

Response: Incorporated in the 2015 guidelines.

  1. IRAS to clarify definition and timing of contemporaneous TP documentation

Response: Contemporaneous TP documentation refers to documentation and information that taxpayers have relied upon to determine the transfer price prior to or at the time of undertaking the transactions. IRAS will also accept as contemporaneous TP documentation any documentation prepared at any time no later than the time of completing and filing the tax return for the financial year in which the transaction takes place. Taxpayers are to exercise their best judgment to determine the most appropriate time for preparing TP documentation within the timeframe.

  1. Transactions pertaining to interest payable to / receivable from an overseas related party do not require full contemporaneous TP documentation as they are considered low risk transactions.

Response: Taxpayers should be mindful of the transfer pricing risks in other tax jurisdictions. IRAS also requires relevant information to determine if taxability of the income has arisen or whether deduction should be given as well to support the taxpayers in MAP discussions for the resolution of double taxation arising from any transfer pricing adjustments made by IRAS or foreign tax authorities.

For full details, please refer to the IRAS website.

Source: IRAS