Transfer Pricing Services
What is Transfer Pricing?↓
The term Transfer Pricing (usually referred to as TP) refers to how related parties price goods, services, intangible assets, loans and other transactions between them. TP Rules/ Regulations are established in various countries to ensure that related party prices are reasonable and fair. Singapore tax authority expects related party transactions to be carried out at arm’s length.
What is Transfer Pricing Documentation?↓
Many countries around the world have transfer pricing documentation requirements. Transfer Pricing documentation refer to the records prepared as evidence that the pricing is at arm’s length.
Transfer Pricing Documentation requires the analysis of the company, industry and functions (including assets and risks) to be able to “characterise” the entity and transactions. Once “characterised” for transfer pricing purposes a transfer pricing method is selected and applied using an economic analysis (often called a comparable search). This comparable search is compared to the financial information of the entity being review to evaluate whether the international related party transactions have been conducted at arms-length.
When is Transfer Pricing Documentation required to be prepared?↓
Singapore transfer pricing guidelines outlines that the taxpayers must prepare contemporaneous transfer pricing documentation for all of its related party transactions prior to or at the time of undertaking the transaction, unless exempted. For ease of compliance, the IRAS will also accept as contemporaneous transfer pricing documentation prepared at any time no later than the time of completing and filing tax return for the financial year in which the transaction takes place. For example, transfer pricing documentation for transactions carried in financial year 2016 should be prepared no later than 30 November 2017.
Are there fines for not complying with Transfer Pricing Documentation requirements?↓
Yes, IRAS may impose penalties under the general penalties regime of the Singapore Income Tax Act for violation of record or information keeping requirements.
What approach should we take to Transfer Pricing Documentation?↓
The answer to this question is highly dependent on your company’s facts and circumstances. We pride ourselves in taking a practical approach that can be implemented on a day-to-day basis by your finance team. Please contact us to discuss further.