Worldwide transfer pricing reference guide 2014

Singapore (continued)
Frequency of tax audit and transfer pricing scrutiny by the tax authority
With the passing of a specific statutory provision on transfer pricing in 2009, there has been an increase in the number of tax queries
that involves transfer pricing.
In general, the likelihood of an annual tax audit is characterized as medium. If an audit is conducted, the likelihood of transfer pricing
being reviewed is characterized as medium. The likelihood that the transfer pricing methodology is challenged as part of an audit is also
characterized as medium.
The recent trend in Singapore transfer pricing audits and queries have varied between requesting high-level replies on the arm’s length
nature of a taxpayer’s intercompany transactions to detailed information on specific transfer pricing transactions. In situations where
more generic queries have been made, the IRAS has delved more deeply into the transfer pricing affairs of the taxpayer in later rounds of
a tax query. In these situations, the likelihood that the IRAS may further request for Singapore transfer pricing documentation or further
detailed explanation on the taxpayer’s intercompany transactions is more.
Lately, there has been a decrease in the questionnaires being issued by the IRAS as part of the annual transfer pricing consultation
process. In July 2008, the IRAS issued a circular on transfer pricing consultation. The transfer pricing consultation process is intended to
assess the level of taxpayers’ compliance with the Singapore Transfer Pricing Guidelines and to identify potential areas where the IRAS
can further facilitate and advise taxpayers on appropriate transfer pricing practices. Based on the answers to the questionnaire, the
IRAS will assess whether a field visit to the taxpayer’s business operations and review of the taxpayer’s transfer pricing documentation
are necessary. Further steps may involve specific guidance from the IRAS to the taxpayer regarding compliance with the arm’s length
principle.
APA opportunity
APAs are available in form of unilateral, bilateral and multilateral APAs. There has been a large increase in requests for APAs since the
availability of APAs was clarified in the Singapore Transfer Pricing Guidelines in February 2006. However, for bilateral and multilateral
APAs, there must be a double tax agreement between Singapore and the other involved country or countries. The Singapore Transfer
Pricing Guidelines outline the procedures for applying for an APA. Further procedural guidance on the APA process has been provided
in the IRAS circular “Supplementary Administrative Guidance on Advance Pricing Arrangements,” issued in October 2008. The circular
includes guidance on the following:
• Suggested timing for the overall APA process: the taxpayer should ideally approach the IRAS 10 months prior to first day of the APA
period to initiate discussions regarding the APA request
• Content requirements for pre-filing materials and formal APA submission
• The process following the filing of the formal APA submission, including regular updates with the taxpayer
• The circumstances under which the IRAS may reject a taxpayer’s APA request
• The nature of taxpayer resources and the commitments that should be made when an APA is requested
• That “rollbacks” are limited to bilateral and multilateral APAs
Expected reaction to OECD Report on BEPS
As of January 2014, there is no change to the regulatory environment.
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