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Singapore Tax Headlines in 2019

The Singapore Taxation Bureau implemented the new tax law in 2019 to strengthen the supervision of the rationality of the pricing of connected transactions

The Singapore Taxation Bureau enacted new regulations in 2018, which set the transfer pricing requirements for related party transactions, and from the 2019 tax year, the transfer pricing documents and contemporaneous documents required by the taxpayers to be prepared and retained in order to show that the related transactions are in a reasonable market. The transaction price is carried out. At the same time, a new penalty mechanism and penalties for aggravating violations were introduced.

Scope of application of tax law

· Who needs to prepare

The total turnover of the taxpayer exceeds the mandatory requirement of S$10 million. It is recommended that other taxpayers with connected transactions be prepared to explain the reasonableness of the transaction when the tax bureau raises an objection.

· what to prepare

Prepare the related transaction transfer pricing report for review by the tax bureau. At the same time, all contemporaneous documents and transfer pricing documents are retained for review. (Note: all documents must be in English)

· What are the contents of the report?

According to the guidelines of the Singapore Taxation Bureau’s related party transfer pricing report,

- detail the business of the entire group, including the part of the Singapore taxpayer;

- Related transactions of taxpayers, including transactions, transactions, loans, etc.;

- Analyze the market price rationality of the company's connected transactions in a 3-step process, ie

1) Perform comparable market research and analysis

2) Adopt 5 methods, comparable uncontrolled price method, cost addition method, resale price method, transaction net profit method, profit division method, analyze and decide the applicable company law for detailed analysis

3) Determine how the company's transactions meet the market's reasonable transaction price by quartile

· Related party transactions

In response to the related payments between related parties, including interest-free, interest-bearing loans, collection and payment, etc., the tax bureau introduced new regulations requiring taxpayers to analyze whether the terms of the payment entered according to reasonable market interest and conditions.

· Compliance time limit

Before the 2019 tax return (ie before the end of November 2019)

· How often do you prepare?

Once the compliance requirements are met, the taxpayer only needs to prepare a full transfer pricing report every three years; and provide a statement (including analysis of related party transactions) for two years.

in conclusion

The new requirements have a major impact on many companies that conduct connected transactions, even those that only have current or only collection services. Time to meet compliance requirements is tight, if you need assistance, please contact us

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