TaxSavvySG

Surcharge on transfer pricing adjustments

What happens if IRAS adjusts our transfer prices?

The situation

A surcharge of 5% of the amount of the TP adjustment applies, whether or not there is extra tax.

The law

  • Sec 34E, Income Tax Act 1947: Surcharge of 5% on transfer pricing adjustments made by IRAS

What it means for you

Example: IRAS adjusts a related party service charge up by S$500,000: surcharge S$25,000 plus any tax. IRAS may remit the surcharge in some cases, such as good documentation.

What to do

  1. Benchmark prices.
  2. Document well.
  3. Respond to IRAS queries.
  4. Ask for remission if eligible.

We can do this for youTransfer pricing documentation: SGD 5,000

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