Determining whether your transfer pricing is compliant comes down to two questions: are your related-party transactions priced at arm's length, and can you demonstrate it with proper documentation? A practical review usually covers:
- Identifying all related-party transactions – sales and purchases of goods, services, financing (loans and guarantees), and use of intangibles such as royalties.
- Selecting and applying an appropriate transfer pricing method for each type of transaction, in line with IRAS's Transfer Pricing Guidelines.
- Benchmarking your pricing or margins against comparable independent parties, and refreshing the analysis periodically.
- Checking whether you meet the thresholds for preparing contemporaneous Transfer Pricing Documentation (broadly, where gross revenue exceeds S$10 million or certain per-category transaction values are exceeded), and preparing it by the filing due date if so.
- Completing the related-party transactions reporting form where required with your tax return.
If any of these are missing or out of date, your policies may not withstand an IRAS review. Apexia can carry out a transfer pricing health check, benchmark your transactions, and prepare compliant documentation.