Transfer Pricing Recruitment: Spotlight Series: Singapore
04 November 2016

Though physically small, Singapore is an economic giant. It has been Southeast Asia's most modern city for over a century. The city blends Malay, Chinese, Arab, Indian and English cultures and religions. Its unique ethnic tapestry affords visitors a wide array of sightseeing and culinary opportunities from which to choose.

Singapore lies one degree north of the Equator in Southern Asia and because of its efficient and determined government, it has become a flourishing country that excels in trade and tourism and is a model to developing nations, welcoming leisure and business travellers all year round. Singapore’s excellent infrastructure enables visitors to enjoy its many sites and attractions in a safe, clean and green environment. Award winning Changi Airport provides air links to major cities around the world. The train and subway systems are clean, fast and efficient.

In the city, there is no need for a car. Public transportation is excellent and walking is a good way to explore the city. Its tropical temperatures do not vary much and rainfall is fairly evenly distributed through the year. No matter when you choose to visit, warm weather will be abundantly available to enjoy Singapore's abundance of parks, nature reserves, and lush, tropical greenery.

Singapore Transfer Pricing Overview

Singapore requires compliance of the arm’s-length principle for pricing of related-party transactions involving goods, services and intangible property. The Inland Revenue Authority of Singapore (“IRAS”) has increased focus on transfer pricing (“TP”) issues and also significantly stepped up related enforcement activities in recent times. Questions regarding transfer pricing of related-party transactions are also now a regular feature of information requests from the IRAS.

Section 34D of the Singapore Income Tax Act (“SITA”) empowers the IRAS to make tax adjustments in cases where the dealings between related parties do not reflect arm’s length conditions. On 6 January 2015, the IRAS released the second edition of the Transfer Pricing Guidelines (“the Guidelines”), an update to the first edition published on 23 February 2006 to provide more comprehensive guidance on the application of TP rules in Singapore.

Section 33 of the SITA contains general anti-avoidance rules that allow IRAS to disregard or revise any arrangement in order to counteract a tax advantage obtained under an existing arrangement. The rules are applicable to any scheme, agreement or transaction as a whole, as well as the component steps by which the arrangement was carried into effect. The anti-avoidance rules do not apply if the arrangement is conducted for bona fide commercial reasons and the reduction or avoidance of tax is not one of its main purposes.

Section 34D of the SITA empowers the IRAS to make tax adjustments in cases where the dealings between related parties do not reflect arm’s-length conditions. Section 53(2A) of the SITA applies where a resident and a non-resident are closely connected and conduct business in such a way that produces profits to the resident that are less than the ordinary profits that might be expected to arise in such transactions. In such a case, the IRAS may assess and charge the non-resident tax in the name of the resident, as if the resident were an agent of the non-resident. Where the ‘true’ amount of the profit is not readily ascertainable, the IRAS have the power to assess tax on a ‘fair and reasonable’ percentage of the turnover of the business done between the resident and the non-resident.

The IRAS also has the power to simply refuse to accept a tax return as filed and assess tax based on taxable income determined according to the best of its judgment. The Guidelines also set out the requirement of Singapore taxpayers to comply with the arm’s‑length principle for related-party transactions and the second edition Guidelines now set out clearly the IRAS’ expectation of Singapore taxpayers to prepare and maintain robust documentation, including contemporaneous TP documentation and the types of information to be found in them, to demonstrate their compliance with the arm’s-length principle for related-party transactions, as well as spell out the adverse consequences that Singapore taxpayers could face if they are found to have insufficient documentation in this regard.

TP Careers in Singapore

Singapore is a regional hub location for Southeast Asia for many Multinational Corporations (“MNCs”). At last count, there were over 6000 regional HQ’s of global companies in Singapore and MNCs continue to choose Singapore as the regional HQ location of choice because of its sophisticated infrastructure and technology capabilities, the ease of doing business and favourable tax regime.

This environment presents plenty of opportunities for the Transfer Pricing professional to work on regional supply-chain and restructuring projects, APAs and now more regular documentation work such that the variety of TP assignments on offer compares favourably with larger, more established cities.

Singapore has had no problems attracting its fair share of talented TP professionals from around the world over the past 10 years. Because of its status as a safe, desirable location, coupled with providing challenging and interesting TP work opportunities, competition for TP jobs in Singapore is fierce so you do need to be bringing something unique to the table, from a sophisticated TP market.

For a confidential discussion about TP careers in Singapore, please contact Aaron Leslie at: Aaron will be in Singapore from 13-18 November 2016 for a number of meetings, so if you are a company looking to hire TP professionals or a candidate interested in exploring options in Singapore or elsewhere, let Aaron know and he will do his best to meet you.