Transfer pricing non-compliance carries two distinct consequences.
First, failing to prepare contemporaneous Transfer Pricing Documentation when required, or failing to produce it to IRAS on request, is an offence carrying a fine of up to S$10,000.
Second, and usually more significant, IRAS may make a transfer pricing adjustment where related-party pricing is not at arm's length – increasing taxable income and the tax payable. A 5% surcharge is imposed on the amount of the adjustment, and this applies whether or not any additional tax is payable, so it can bite even where the company is in a loss position. IRAS may remit the surcharge in whole or in part in appropriate cases.
Keeping documentation current, consistent with your intercompany agreements and actual conduct, is the practical protection. Apexia can review your position and prepare compliant documentation.