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13.4.4. APAs and Dispute Resolution Mechanisms

Advance Pricing Agreement (‘APA’)

The transfer pricing guidelines generally provide that a taxpayer may enter into a unilateral, bilateral, or multilateral Advance Pricing Arrangement (APA) with the tax authority. Singapore provides for unilateral APAs, as well as bilateral/multilateral APAs when DTAs are in place between Singapore and other relevant jurisdictions. Taxpayers are not restricted in choosing unilateral or bilateral/multilateral if DTA is in place, but unilateral APAs can result in less certainty. If a taxpayer disagrees with the outcome of an APA, they are free to withdraw their application and seek alternate methods such as the MAP process outlined below.

An APA request consists of four main steps, including the following:

  • 1st Pre-filing Meeting - at least nine months before the proposed beginning of the coverage period. Relevant information should be submitted to the Singapore tax authorities at least one month prior to the pre-filing meeting and should include:
    • particulars of the applicant and other related parties, including business models, industry information, and organizational structure, etc.;
    • the nature of the APA requested; unilateral, bilateral, or multilateral;
    • a letter of authorization for any representatives engaged to act on the applicant’s behalf;
    • the transactions to be covered and how they relate to parties involved;
    • an overview of the functions undertaken, assets employed, and risks assumed by the covered parties during the proposed APA period, and an analysis of how they have changed compared to the period prior to the APA period;
    • details and explanation of the transfer pricing method chosen and analysis;
    • proposed period of APA and roll-back period if any;
    • the set of critical assumptions under which the transfer pricing methodology and analysis will operate; and
    • any other relevant information.
  • Formal APA Application Submission - at least four months before the proposed beginning of the proposed coverage period. Information in the application includes the information outlined above and any other information requested by the tax authorities. The IRAS issues an acceptance letter within 1 month from receipt of the application.
  • APA Review & Negotiation - upon acceptance of the submission, the  IRAS will begin the review and negotiation process, which may include:
    • seeking clarifications with the applicant;
    • requesting additional information;
    • conducting site visits;
    • performing consultations and negotiations with the applicant; and
    • performing consultation and negotiations with the relevant foreign tax authority in the case of bilateral/multilateral APAs.
  • Post-agreement meeting and implementation - meeting with the applicant within 4 weeks of reaching an agreement to;
  • Discuss details and implementation; and
  • Discuss compliance and monitoring requirements.

Generally, an APA is for terms of 3 to 5 years, and roll-back can be allowed for bilateral or multilateral APAs on a case-by-case basis to cover 1 to 2 years.

Mutual Agreement Procedure (‘MAP’)

Mutual Agreement Procedure (‘MAP’) is a procedure through which Competent Authorities consult and interact to resolve international tax disputes and to avoid double taxation arising from actions of one or both of the contracting states resulting in taxation that is not in accordance with the applicable double taxation convention. Generally, MAP is followed for transfer pricing cases, anti-abuse provision claims, multilateral disputes, and multi-year resolution of cases.

Singapore includes MAP in DTA's with other jurisdictions. Taxpayers may seek resolution on double taxation issues that recur over multiple tax years, subject to the time limits provided in the relevant DTAs.

Where the MAP request is made  and the agreed MAP outcome between IRAS and the relevant foreign competent authority is accepted by the relevant taxpayers, it is binding on the relevant parties.