Article by Belinda Lim, Associate Director, Transfer Pricing Tax Lead at CLA Global TS.

The buzz words in the tax world these days appear to be Pillar Two as this hits us near with the impending registration deadline of 30 June 2026 under the Singapore’s Multinational Enterprise (Minimum Tax) Act for MNEs with financial year end of 31 December. However, fewer of us are aware that Amount B of Pillar One has crept into Singapore with the inclusion of the Simplified and Streamlined Approach (“SSA”) in the 8th edition of the Singapore transfer pricing guidelines published in the midst of the last
compliance peak period.

Briefly, the Inland Revenue Authority of Singapore (“IRAS”) is implementing the SSA on a pilot basis from 1 January 2026 to 31 December 2028 (“pilot implementation period”). For any financial year beginning during this pilot implementation period, taxpayers can choose to apply the SSA on their qualifying transactions when they meet the qualifying conditions. The SSA will be treated as providing an arm’s length outcome. IRAS will review whether to continue with the SSA after the pilot implementation period.

So, the million-dollar question is therefore, should I choose SSA?

I will use sleep training for babies to discuss this question. Pardon me for those who have no children but for those with children, I am sure this is a million-dollar question that you have faced or are facing as well. To sleep train or not?

The Case for Sleep Training and SSA

Sleep Training

Globalization results in an increasingly fast paced society where time is of the essence. Being tied down tending to your babies sleep issues mean less time for other competing needs. Sleep training is a potential solution to this.

SSA

Due to globalised supply chains and distribution channels, there is increasing cross-border tax disputes on marketing and distribution activities. SSA is a potential solution to the increasing cross-border tax disputes as this aims to simplify and streamline the application of transfer pricing for in-country baseline marketing and distribution activities.

Qualifying Conditions To Be Met

Sleep Training

While anyone who likes to apply sleep training are able to do so, strictly speaking, only if certain qualifying conditions are met, can one apply sleep training.

Below are the qualifying conditions from my point of view:

• Babies must be healthy.
• Babies’ basic needs such as food and warmth are met.
• Parents must be able to stay the course and be consistent. That means having your heart shattered into pieces when you hear your baby endless cries.

SSA

Similarly, there are qualifying conditions to be met for one to be able to apply the SSA:

• The transaction on which the SSA is applied must be a qualifying transaction.
• The qualifying transaction must exhibit economically relevant characteristics that mean it can be reliably priced using a one-sided transfer pricing, with the distributor, sales agent or commissionaire being the tested party.
• The tested party in the qualifying transaction must not incur annual operating expenses lower than 3% or greater than 30% of its annual net revenues.

Simple Rules Reduce Overthinking

Sleep Training

If one adopts sleep training, one must follow the clear rules surrounding bedtime window and response method and not deliberate about these issues every time.

SSA

Similarly, if one adopts the SSA, one would not be concerned on the need to perform a benchmarking study and on how to go about performing the benchmarking study. Instead, there would be clear pricing outcomes within pre-defined profit ranges.

Naysayers

Sleep Training

The popular arguments against sleep training are the potential high stress levels in babies, the disruption of attachment, and the belief that it forces babies to abandon signalling their needs.

SSA

The most common opponent of applying the SSA is decreased tax certainty as outcome determined under the SSA by a jurisdiction that has chosen to apply the SSA to qualifying transactions of its taxpayer is non-binding on the counterparty jurisdiction where the related party to the qualifying transaction is located.

Closing Remarks

From the forementioned, it is clear that there is no easy answer to this million-dollar question of should I choose SSA?

Trust me, I have researched a lot of literature on sleep training but dare not make the first step until a trusted friend shared with me her experiences that I decided to take that leap of faith. I am happy to share that from dreading bedtime with patting time that passed hours and multiple night wakings to cries of protests stretching to 55 minutes, bedtime is now fuss free with no protests and I have reclaimed my personal time at night.

We at CLA Global TS could be your trusted friend and business advisor, helping you navigate your million-dollar tax questions.

View the full article in PDF here.

CONTACT US

CLA Global TS Business Advisors

Tax Advisory Specialists

Edwin Leow Co-Advisory Leader Director, Head of Tax edwinleow@sg.cla-ts.com

Belinda Lim Associate Director, Tax Transfer Pricing Tax Lead belindalim@sg.cla-ts.com