Transfer Pricing Services
Transfer pricing has been gaining attention by the tax authorities as well as businesses with the slew of recent updates to the transfer pricing regulations and guidelines, both internationally and in Singapore. To name a few, the Organisation for Economic Co-operation and Development (“OECD”) updated the OECD Transfer Pricing Guidelines in January 2022 and closer to heart, the Singapore Tax Authority, the Inland Revenue Authority of Singapore (“IRAS”) released the 6th update to the Transfer Pricing Guidelines in August 2021. This is no surprise as transfer pricing influences the level of both direct and indirect taxes that governments collect while at the same time, it is often perceived by tax authorities as a tool used by businesses to shift profits overseas. Against the backdrop of the Covid pandemic in which governments have increased their spending exponentially and the rise in cross border transactions, transfer pricing is likely to continue to be a key focus area of the tax authorities.
Through being part of the Nexia International Accounting Network, we are able to provide a one-stop transfer pricing services from Singapore and foreign tax jurisdiction perspectives.
We provide a full range of transfer pricing solutions which include:
- Transfer pricing risk review;
- Transfer pricing planning and policy setting;
- Transfer pricing documentation;
- Transfer pricing implementation; and
- Transfer pricing controversy and defense.
Transfer Pricing Risk Review
Even if companies do not need to prepare mandatory transfer pricing documentation, companies are still encouraged to conduct regular transfer pricing risk review/assessments of their existing transfer pricing policies amidst the changing international tax/transfer pricing landscape to ensure they meet their transfer pricing obligations. In particular, transfer pricing risk review is even more important when one expects or has new related party transactions or significant events which include the following scenarios in order to identify and mitigate the transfer pricing risks:
- Entrance into new markets/business lines (more information on international tax service);
- Restructuring (more information on international tax service,);
- Mergers & acquisitions (more information on M&A tax service); and
- External events which disrupt the operational/supply chain model.
We are able to assist companies in the transfer pricing risk reviews in such scenarios. Our expertise is not just in providing transfer pricing risk review, but we are able to provide a holistic tax solution spanning from transfer pricing to other areas such as international tax as well as mergers & acquisitions tax services according to your business needs.
Transfer Pricing Planning and Policy Setting
Getting transfer prices right from the first instance is very important in terms of mitigating the company’s transfer pricing risks. It is costly and often challenging to defend transfer pricing policies that are not robust. In addition, transfer pricing can be used as a strategic tax planning tool to optimize the company’s global tax position.
We are able to provide companies with transfer pricing advisory support during the stage of transfer pricing planning and policy setting by:
- Reviewing and assessing the consistency and acceptability of the proposed transfer pricing policies based on OECD’s requirements and from the standpoint of the relevant jurisdiction(s);
- Developing and aligning transfer pricing strategies with the company’s global business goals and objectives taking into consideration the Singapore and overseas tax requirements;
- Preparing/reviewing transfer pricing policy documents;
- Preparing/reviewing intercompany agreements; and
- Applying for unilateral or bilateral/multilateral advance pricing arrangements (“APAs”) to have certainty of the transfer prices.
Transfer Pricing Documentation
From the Year of Assessment 2019 onwards, companies must prepare transfer pricing documentation for their related party transactions undertaken in a basis period when:
- Gross revenue derived from their trade or business is more than S$10 million for that basis period; or
- Transfer pricing documentation is required to be prepared for the previous basis period.
Even if it is not mandatory to prepare transfer pricing documentation, companies are still encouraged to do so especially if their transfer pricing risks are high as transfer pricing documentation serves as a first line of defense for the companies’ transfer prices.
We are able to assist companies in the following:
- Preparing transfer pricing documentation (Full/Simplified) from a Singapore transfer pricing perspective;
- Preparing group master file and transfer pricing documentations for the jurisdictions that the Group operates in that are in compliance with both Singapore and foreign tax jurisdictions transfer pricing requirements;
- Country-by-Country reporting;
- Reviewing existing transfer pricing documentation to ensure compliance with Singapore requirements; and
- Preparing benchmarking studies to support arm’s length pricing of related party transactions where required.
Transfer Pricing Implementation
Setting transfer pricing policies may be challenging but achievable for most companies. However, ensuring that the transfer pricing policies are implemented effectively throughout the various departments/businesses of the companies and to minimize year-end adjustments may be much bigger challenges as they have real costs to the companies.
We are able to assist companies in navigating through these operational transfer pricing challenges by assisting companies in:
- Developing and documenting a customized operational transfer pricing framework, which includes how the transfer prices are set and monitored, the roles and responsibilities of each party involved, etc taking into consideration the companies’ risk appetite and resources; and
- Reviewing transfer pricing calculations.
Transfer Pricing Controversy & Defense
With the increasingly sophisticated tax authorities worldwide trying to maintain/increase their tax revenue, there is a rise in transfer pricing audits as well as transfer pricing controversies.
We are able to assist companies in:
- Defending the transfer pricing policies and transfer pricing outcomes in transfer pricing audits; and
- Applying for mutual agreement procedures (“MAPs”) to resolve double taxation.
Contact Our Tax Specialists for A Discussion
|Edwin Leow |
Director, Head of Tax
|Shaun Zheng |
Private Wealth and Asset Management Tax Lead