Singapore Compulsory Transfer Pricing Documentation and Non-Compliance Penalties
Singapore introduced compulsory transfer pricing documentation effective from the year of assessment (YA) 2019. A new penalty regime was also included for non-compliance with the TP documentation requirements.
Penalties and surcharge for Non-Compliance with Transfer Pricing Documentation Requirements
With effect from YA 2019, a fine not exceeding SG$10,000 may be imposed for the following offences:
- Failure to prepare TP documentation by the time for the making of the tax return
- Failure to prepare transfer pricing documentation with the details and in the form and content as prescribed by the TP Documentation Rules
- Failure to retain TP documentation for a period of at least 5 years
- Failure to submit TP documentation within 30 days from a request by IRAS
- Providing TP documentation that is false or misleading
The non-compliance offence applies to every offence. Therefore, if a taxpayer does not prepare TP Documentation for one basis period or more, the fine applies to each year. For example, a company that is required to prepare TP Documentation but fail to prepare it for YA 2019, YA 2020 and YA 2021. The non-compliance fine will be SG$10,000 per year for a total for SG$30,000.
In the course of transfer pricing audit or review, IRAS may make transfer pricing adjustments to increase a taxpayer’s income or reduce its deduction or loss if the taxpayer has understated its profits due to non-arm’s length related party transactions.
Other than the penalty, a surcharge of 5% on the amount of TP adjustment will be imposed. The 5% surcharge will be imposed regardless of whether there is any additional tax payable resulting from the transfer pricing adjustment.
Hence, the taxpayer might need to bear the additional tax resulted from the TP adjustments, penalty not more than SG$10,000 and surcharge of
5% on the TP adjustment.
Contributed by Director Adriana Calderon
Adriana is the co-founder of Transfer Pricing Solutions Asia and Transfer Pricing Solutions Malaysia and Lead Partner in Asia.
Adriana has extensive international experience with Big Four and mid-tier firms advising multinational companies in the areas of corporate and international taxation across South America, the US, Australia and the Asia Pacific Region.
As a TP practitioner, Adriana has advised companies in the Asia Pacific Region across various industries and in a wide range of projects associated with planning.
Adriana also enjoys teaching and is a regular speaker and facilitator of Transfer Pricing seminars and workshops in Singapore. She is a transfer pricing trainer for the Institute of Singapore Chartered Accountants and Singapore Institute of Accredited Tax Professionals.
Adriana lives in Singapore with her family and is a mother to two energetic boys
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