On 12 January 2017 the Inland Revenue Authority of Singapore (“the IRAS”) released the fourth edition of the Singapore Transfer Pricing Guidelines (4th edition of TP guidelines). The changes reflect Singapore’s commitment to implement the four minimum standards under the Base Erosion Profit Shifting (BEPS) project published by the OECD as well as IRAS’ commitment to adhere to the Transfer Pricing Principles developed pursuant to the BEPS Actions 8 – 10.
The key messages are:
- The IRAS has clearly stated its position and alignment with the international practice that “profits should be taxed where the real economic activities generating the profits are performed and where value is created”. In this respect, the IRAS has adopted the latest OECD’s guidance to be followed in the conduct of the functional analysis to be undertaken as part of the transfer pricing analysis, in particular concerning risk-management and -assumption (sections 5.20 – 5.23).
- The IRAS has introduced a safe-harbour administrative practice for intercompany loans not exceeding 15 mSGD, relieving related companies to proceed with a detailed transfer pricing analysis for the determination of the arm’s length interest to be charged. This safe harbour is implemented through the mechanism of an indicative margin published on the IRAS website annually. The indicative margin should apply on an appropriate base reference rate. “ For more information please click HERE!
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