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Demystifying Transfer Pricing Rules and Regulations in Singapore


Transfer pricing plays a vital role in international tax planning and is a key area of focus for tax authorities around the world. In Singapore, the Inland Revenue Authority of Singapore (IRAS) is responsible for administering the country’s transfer pricing rules. This article aims to provide a comprehensive overview of the statutory rules, regulations, and circulars related to transfer pricing in Singapore.

I. Relevant Rules, Regulations, and Statutory Basis:

1. Section 34D of the Income Tax Act (ITA):

The main transfer pricing rule in Singapore is covered under Section 34D of the ITA. This provision was introduced in 2010 and replaced the previous provisions of Secs. 53(2A) and 33 of the ITA, which enabled the application of transfer pricing principles. Section 34D applies when two parties are related, and conditions between them differ from those that would be made if they were unrelated. Profits that would have accrued to one party but have not due to these conditions may be included in the profits of that party for income tax purposes. Additionally, if a person conducts business through a permanent establishment, Section 34D treats the person and the permanent establishment as separate entities.

2. Transfer Pricing Guidelines (TP Guidelines):

The IRAS has issued detailed transfer pricing guidelines to provide clarity on transfer pricing matters and procedures in Singapore. These guidelines were initially introduced in 2006, even before the enactment of Section 34D. The TP Guidelines cover various aspects such as the application of the arm’s length principle, documentation requirements, transfer pricing compliance, advance pricing agreements (APAs), and the mutual agreement procedure (MAP) to avoid double taxation.

The TP Guidelines have undergone several updates and revisions over the years. Notably, the fifth edition of the e-tax guide was published on 23 February 2018, which explicitly adopted the arm’s length principle as the standard for related-party transactions. The fifth edition contains information on related party definitions, comparability analysis, transactional profit split method, transfer pricing adjustments, documentation requirements, and guidance on MAP and APAs.

Furthermore, on 24 May 2019, the IRAS released transfer pricing guidelines specifically for taxpayers engaged in commodity marketing/trading activities. These guidelines aim to assist taxpayers in complying with the arm’s length principle and transfer pricing documentation requirements when conducting such activities with related parties.

In addition, the IRAS issued an e-Tax Guide on Transfer Pricing Guidelines Special Topic – Centralized Activities in Multinational Enterprise Groups on 19 March 2021. This guide focuses on analyzing the importance of centralized activities in Singapore and provides guidance on analyzing these activities, factors affecting transfer pricing arrangements, and suitable transfer pricing methods for benchmarking such activities.

The sixth edition of the e-tax guide on transfer pricing was released on 10 August 2021. It introduces a new chapter on cost contribution agreements and expands guidance on financial transactions, among other revisions.

II. Taxing Authority and Tax Law:

The Inland Revenue Authority of Singapore (IRAS) is the main tax administration agency responsible for administering Singapore’s tax laws, including transfer pricing regulations. The IRAS ensures compliance with the transfer pricing rules and provides guidance to taxpayers through the TP Guidelines.

III. OECD Guidelines Application:

While Singapore is not a member of the OECD, its transfer pricing guidelines are broadly in line with the OECD Guidelines, especially concerning the determination of the arm’s length principle and documentation requirements. The Key Concepts & Guiding Principles chapter of Singapore’s TP Guidelines explicitly references the OECD standards, and elements of the OECD Model Tax Convention are also incorporated.


Transfer pricing regulations in Singapore are governed by Section 34D of the Income Tax Act and supported by the comprehensive Transfer Pricing Guidelines issued by the IRAS. These guidelines provide detailed instructions and procedures to ensure compliance with the arm’s length principle and transfer pricing documentation requirements. Although Singapore is not an OECD member, its TP Guidelines align with international best practices and draw inspiration from the OECD Guidelines. By following these rules and regulations, taxpayers can effectively manage their transfer pricing risks and contribute to a fair and transparent tax system in Singapore.

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