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13.4.3. Documentation Requirements

Disclosure Requirements

Disclosure Requirements

There are no disclosure requirements in Singapore, but transfer pricing documentation should be prepared and kept for as long as transfer pricing issues may arise.

Effective from the assessment year 2018, companies are required to report related party transactions if the value of related party transactions exceeds SGD 15 million for the relevant year. The value of the related party transactions is the sum of the following:

  • All amounts received/ receivable from related parties and all amounts paid/ payable to related parties as reported in the income statement, but excluding compensation paid to key management personnel and dividends; and
  • Year-end balances of loans and non-trade amounts due from/ to all related parties.

Effective from the assessment year 2020, the form for reporting related party transactions is available as part of the corporate tax return. Previously, companies were required to submit a separate form along with the corporate tax return.

Standard Documentation

Singapore introduced Income Tax (Transfer Pricing Documentation) Rules (largely similar to the OECD Master file and Local file), effective from the assessment year 2019 (i.e., the financial year 2018), whereby taxpayers meeting the following conditions are required to prepare and maintain contemporaneous documentation for each related party transaction:

  • Gross business revenue is more than SGD 10 million for that basis period (financial year), or
  • Transfer pricing documentation is required to be prepared for the transactions undertaken by the company in the previous basis period.

The documentation requirements are based on a three-tiered structure consisting of:

  • Documentation at the group level, including:
    • an overview of the group’s business;
    • the group’s worldwide organizational structure;
    • a description of the group’s intangible assets that are used in or applied to the business of the applicable entity in Singapore;
    • a description of the group’s financial activities that are connected to the business of the applicable entity in Singapore;
    • financial statements; and
    • a list and a description of the group’s unilateral APAs and tax rulings;
  • Documentation at the entity level, including:
    • the management structure;
    • the organizational structure;
    • a description of the applicable entity’s business;
    • a description of transactions between the applicable entity and its related parties; and
    • a transfer pricing analysis;
  • Country-by-country (CbC) report (discussed below separately).

Transfer pricing documentation must be prepared no later than the due date of filing the corporate tax return and must be submitted within 30 days upon request by the IRAS. As long as the details in the TP documentation remain accurate, taxpayers may refresh their transfer pricing documentation once every 3 years. The transfer pricing documentation must be retained for at least 5 years from the end of the financial year in which the transaction took place.

Exemption from transfer pricing documentation applies to the following transactions:

  • Related party domestic transactions subject to the same tax rate;
  • Related party domestic loan where the lender is not in the business of borrowing and lending money;
  • Related party loan not exceeding SGD 15 million where taxpayer applies the indicative safe harbour margin;
  • Routine support services on which the taxpayer applies a 5% cost mark-up;
  • Related party transactions covered by an advance pricing arrangement; and
  • The value of related party transaction (to the extent not covered in the above conditions) not exceeding the fixed thresholds, as follows:
    • SGD 15 million for transactions relating to the purchase and sale of goods and loans; and
    • SGD 1 million for transactions relating to the grant of right to use movable property, lease of any property, grant of guarantee, and other transactions.

  

Country-by-Country (CbC) Reporting

The CbC reporting requirements are applicable for financial years beginning on or after 1 January 2017 for Singapore MNE groups (ultimate parent tax resident in Singapore) that have subsidiaries or operations in at least one other jurisdiction and consolidated group revenue of at least SGD 1.125 billion in the previous year. Effective from financial years beginning on or after 1 January 2022, extraordinary income and gains from investment activities are required to be included for computing the consolidated group revenue.

Currently, Singapore does not require secondary filing by constituent entities or surrogate filing for foreign MNE groups.

On 31 October 2022, the IRAS published an updated e-Tax Guide on the CbC reporting requirements. The submission of CbC reports must be done in accordance with the format specified in the e-Tax Guide. The contents of the CbC report include the following for each jurisdiction:

  • Table 1:
    • revenues (unrelated parties, related parties, and total);
    • profit (loss) before tax;
    • income tax paid (cash basis);
    • income tax accrued - current year;
    • stated capital;
    • accumulated earnings;
    • number of employees; and
    • tangible assets - other than cash and cash equivalents.
  • Table 2:
    • constituent entities resident in each tax jurisdiction (including Tax ID and address);
    • jurisdiction of organization or incorporation if different from jurisdiction of residence; and
    • main business activities of each constituent entity.
  • Table 3:
    • additional information or explanation deemed necessary to understand the CbC report.

CbC reports must be submitted using the prescribed CbCR XML schema as provided by the OECD. The CbC report is due within 12 months from the last day of the financial year. . Further details regarding the filing of CbC reports are available on the IRAS CbC reporting webpage.

Notification of Filing Obligation

Effective from financial years beginning on or after 1 January 2022, reporting entities (i.e., the ultimate parent entity of a Singapore MNE group) must notify IRAS of their obligation to file a CbC report in Form SG within 3 months from the end of the financial year (31 March 2023 for the year ending 31 December 2022) together with the following information:

  • Name and Tax Reference Number of the ultimate parent entity (i.e., reporting entity);
  • Financial reporting period of the ultimate parent entity;
  • A declaration that the reporting entity satisfies the requirements to submit a CbC Report for that financial reporting period;
  • Personal particulars of the contact person including name, contact number, and e-mail id; and
  • Personal particulars of the individual authorized by the reporting entity to file the notification (if different from that used to provide the above information).

The IRAS will verify the notifications filed by the reporting entities and confirm their filing obligation within 2 months from the receipt of the notifications.

For financial years beginning before 1 January 2022, the IRAS issued notification letters each year to reporting entities on their obligation to file a CbC report for the preceding financial year. If reporting entities who were required to file a CbC report did not receive a letter, they were required to notify the IRAS at least 3 months before the filing deadline.

Language of Documentation

The transfer pricing documentation must be prepared in English or translated into English.

Penalties

Effective from the assessment year 2019, failure to prepare the documentation in accordance with the ITA attracts a fine of up to SGD 10,000.

If a transfer pricing adjustment is made, the penalty can range from 100% to 400% of the tax deemed underpaid. The penalty is based on the severity of the offense, and higher penalties are more likely to be imposed if transfer pricing documentation is unavailable or insufficient (although there are no direct penalties for lack of documentation specifically).

In cases of willful fraud, the maximum 400% penalty will likely be imposed, as well as fines up to SGD 50,000 or imprisonment of up to 5 years.

Effective from the assessment year 2019, transfer pricing adjustments made by the IRAS are subject to a 5% surcharge on the quantum of the adjustment.

The following penalties apply in case of non-compliance with the CbC reporting requirements:

Non-compliance Penalty
Failure to notify, late filing, or failure to file a CbC report A fine of up to SGD 5,000 and imprisonment of up to 6 months if the fine is not paid. A further daily fine of up to SGD 100 applies for a continuing default.
Failure to retain documents and information used to prepare a CbC report for 5 years after the end of the financial year A fine of up to SGD 1,000 and imprisonment of up to 6 months if the fine is not paid. A further daily fine of up to SGD 50 applies for a continuing default.
False/Misleading CbC information A fine of up to SGD 10,000 and/or an imprisonment term of up to 2 years.