Even if the Singapore taxation system is one of the most favorable among Southeast Asian states, there are several important aspects to consider when operating here as a group of companies. Singapore is also known for the tax benefits it offers to holding companies
, which is why setting up a business under this form is quite appealing.
Transfer pricing (TP) in Singapore
, transfer pricing
or TP rules
apply in cross-border transactions. In most cases, holding companies established here or Singapore subsidiaries
of foreign holding companies are targeted by these regulations, as they are highly to engage in cross-border activities.
In order to prevent abuse and/or fraud, the Singapore government has created specific transfer pricing guidelines.
The Singapore TP guidelines provides for the following:
- - the prices of goods;
- - the prices of services;
- - the funds associated with the sale of goods;
- - the prices related to the transfer of assets from one country to another.
All Singapore transfer pricing guidelines
can be explained by our local agents. You can also rely on us if you want to open a company in Singapore
Transfer pricing guidelines in Singapore and their principles
Most of Singapore transfer pricing guidelines rely on the arm’s length principle which is widely spread across the world. This principle implies that companies linked to one another through management, control or capital should use similar terms and conditions when it comes to transactions completed among them just as they would with unrelated business. This would ensure equality and fairness in treatment, or better said it would avoid favorizing businesses from the same group.
- - Section 34D in the Income Tax Law;
- - the Business Profits Article;
- - the Associated Enterprises Article;
- - Singapore’s double tax treaties.
The Singapore TP guidelines are applied based on a 3-step analysis.
Our Singapore company formation advisors
can offer detailed information on the taxation of companies in the city-state and various applications of double tax treaty provisions
Singapore transfer pricing guidelines based on the 3-step analysis
According to the transfer pricing guidelines Singapore
, there is a 3-step analysis that can be completed in order to determine if companies respect the regulations for cross-border transactions as approved by the Inland Revenue Authority
in the city-state. These are:
- the comparative analysis between uncontrolled and controlled prices or margins;
- the identification of the safest transfer pricing method;
- the verification of the arm’s length principle results.
When it comes to the methods a taxpayer can employ to determine whether they meet the Singapore TP guidelines, the following are available:
- - the comparable uncontrolled price;
- - the resale price;
- - the cost plus procedure;
- - the profit split procedure;
- - the transactional net margin procedure.
If you need support in understanding how Singapore transfer pricing guidelines
apply under the aforementioned methods, our accountants
in the city-state are at your service.
Information to be provided in order to meet transfer pricing rules
Taxpayers engaged in cross-border activities seeking to meet all Singapore transfer pricing guidelines must present the following documents for a thorough examination:
- - detailed information on the group of companies;
- - information on the company (-ies) operating in Singapore;
- - a presentation of all the transactions between the Singapore company and the other businesses in the group;
- - the transfer pricing calculation.
Our company registration consultants
can help you create a holding company in Singapore
, so that you can take advantage of the tax benefits such a business offers.
Taxation of holding companies in Singapore
Apart from the Singapore transfer pricing guidelines
, there are also other aspects to consider when it comes to holding companies
in the city-state. Among these, from a taxation point of view:
- - the corporate tax applicable to them is the standard one of 17%;
- - a holding company can also benefit from a lower rate of 5.67% of the corporate tax if it meets certain requirements;
- - transfer pricing rules apply to holding companies with a gross revenue of more than 10 million USD.
For more information on the applicable transfer pricing rules in Singapore
, please contact our local agents