Transfer pricing documentation Singapore rules sound like a large-multinational problem, and for a long time they mostly were in practice. But any Singapore company with related-party transactions, an intercompany loan from a parent, a service fee paid to a sister company, goods bought from an affiliated entity overseas, falls within scope of the rules. The question most SMEs actually need answered is whether they’re big enough, or transact enough, to require formal documentation.
The core rule: arm’s length pricing
IRAS requires that transactions between related parties be priced as if the parties were unrelated, applying market terms rather than terms that shift profit between entities for tax advantage. This applies regardless of company size. What differs by size is whether you need to formally document how you arrived at those prices.
Who must prepare transfer pricing documentation
A Singapore taxpayer generally needs to prepare contemporaneous transfer pricing documentation if both of the following apply in the relevant financial year:
- Gross revenue from the trade or business exceeds S$10 million, and
- Related-party transactions exceed specific category thresholds set out in IRAS’s rules
The category thresholds vary by transaction type. For the purchase and sale of goods between related parties, the threshold is S$15 million. For other categories, such as services, royalties, guarantees, and related-party loans, the exemption threshold has been raised to S$2 million from Year of Assessment 2026 (up from S$1 million previously) for most non-loan categories.
If your related-party transactions in a given category sit below the applicable threshold, you’re generally exempt from having to prepare full contemporaneous documentation for that category, though this is an exemption from documentation, not from the underlying arm’s length requirement itself.
What “exempt from documentation” doesn’t mean
This is the point that trips up a lot of SMEs. Falling below the documentation threshold doesn’t mean IRAS won’t ask about related-party pricing, and it doesn’t mean you can price those transactions however you like. You’re still expected to apply arm’s length pricing, and to be able to explain and support your position if IRAS asks, even informally. The exemption simply means you’re not required to have prepared a full, formal transfer pricing report in advance.
In practice, it’s still sensible to keep basic supporting records, how a management fee was calculated, what interest rate applies to an intercompany loan and why, even if you’re not required to produce a full TP study.
What documentation actually involves, if you need it
Where documentation is required, it generally covers:
- A description of the group structure and the taxpayer’s role within it
- Details of the related-party transactions in question
- The transfer pricing method applied, and why it was chosen
- A comparability analysis, benchmarking the pricing against comparable arm’s length transactions or margins
This is specialist work, and most SMEs that cross the threshold engage a tax advisor or transfer pricing specialist rather than attempting it internally.
Common related-party situations SMEs overlook
- A director’s loan to the company, or the company’s loan to a related entity, priced without reference to a market interest rate
- Management or service fees charged between a Singapore company and an overseas parent or sister company, set at a round number rather than a cost or margin basis
- Goods or inventory purchased from a related overseas supplier at a price that hasn’t been benchmarked against market rates
Even where these fall below the formal documentation threshold, IRAS can still query the pricing, so it’s worth having a reasoned basis on file.
What to do next
If your company has any related-party dealings, the first step is simply mapping them out: what’s being transacted, with which related entity, and at what price. From there, you (or your tax advisor) can assess whether you’re within the documentation exemption, and if not, what needs to be prepared.
Not sure if this applies to you?
Talk to Abacuscorp about your related-party transactions and whether transfer pricing documentation applies to your business.
