The Inland Revenue Authority of Singapore (IRAS) released the 7th edition of its Transfer Pricing Guidelines on 14 June 2024. To assist taxpayers to understand the changes and assess their impacts, WTS Taxise Associate Principal Christine Schwarzl summarises, in this article, the main changes to the guidelines, including:
I. Financing transactions
• Changes to TP Documentation (“TPD”) preparation exemption for domestic related party loans entered into from January 2025;
• Inclusion of Frequently Asked Questions (FAQ) and TPD guidance for long-term loans; and
• Guidance on the application of base reference rates in determining interest rates.
II. Capital transactions
• Clarifications of IRAS’s view on the transfer or sale of fixed assets between RPs; and
• Documentation is not mandatory (but is preferred).
III. Economic analysis
• Guidance on making working capital (“WC”) adjustments (interest rates to be used, etc.);
• Guidance on conditions relating to strict pass through costs; and
• The TP treatment of government assistance.
IV. Audits, surcharges, TPD and other changes:
• Elaboration on the TP audit process;
• Clarification on the conditions under which IRAS will disregard an actual RP transaction;
• An understanding of partial or full remission of S34E surcharges;
• Increase of thresholds and clarification on transaction category aggregation; and
• Date requirement for completion of simplified TPD.
The new TP Guidelines reflects an easing of the compliance burden for taxpayers, where related party transactions fall below the increased thresholds for TPD preparation. However, if your company has related party financing transactions, a transfer or sale of fixed assets, or if you have received government assistance, then you may well be impacted by the changes in the TP Guidelines.
To read the full article, click here to download a copy.
For further information, please contact:
Christine Schwarzl, WTS Taxise Asia
Christine.Schwarzl@TaxiseAsia.com
