The arm's length principle is mandatory for all related-party transactions – Section 34D of the Income Tax Act requires them to be priced as independent parties would. Preparing formal Transfer Pricing Documentation (TPD), however, is only mandatory once you cross the thresholds.
Section 34F, which applies from the Year of Assessment 2019 onwards, requires contemporaneous TPD where the taxpayer's gross revenue for the basis period exceeds S$10 million, or where TPD was required for the preceding YA. Even below that, documentation is required for specified categories of related-party transactions once they exceed the prescribed per-category values.
Where TPD is required it must be prepared by the time the tax return is filed, kept for at least five years, and produced to IRAS within 30 days of request. Separately, companies with related-party transactions above S$15 million in total must complete the Form for Reporting of Related Party Transactions with the return.
Where pricing is not at arm's length or documentation is absent, IRAS can make transfer pricing adjustments and impose a 5% surcharge on the adjustment, whether or not additional tax is payable. Apexia can confirm whether you meet the thresholds and prepare compliant documentation.