Singapore prepares to develop transfer pricing policy
January 19, 2009
The Inland Revenue Authority of Singapore (IRAS) issued transfer pricing guidelines for the first time in February 2006. In July 2008 the tax authorities opened a consultation to find out from taxpayers how the guidelines were working and if any changes were required. Chai Sui-Fun, assistant commissioner in the tax policy and international tax division of IRAS, explains the Singapore approach to transfer pricing to Ralph Cunningham of www.tpweek.com
Why did you publish guidelines in February 2006 when you did not have them before?
Though we did not have a formal set of transfer pricing guidelines in the past, we have always abided by the arm’s-length principle and we required taxpayers to comply with this requirement. During an assessment, our tax officers assess if transactions between related parties adhere to the arm’s-length principle. In doing this, we are guided by internationally endorsed arm’s-length concepts and principles, such as those set out in the OECD transfer pricing guidelines. We have decided to publish guidance for two main reasons: to provide greater certainty to businesses on the application of arm’s-length principle in Singapore and to raise the awareness of our business community on transfer pricing risks as they globalise their business operations.
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