Latest Singapore Transfer Pricing (TP) Guidance

What has changed and how does it impact your TP policies within the wider global landscape

On 19 November 2025, the Inland Revenue Authority of Singapore (“IRAS”) released the e-Tax Guide: Transfer Pricing Guidelines (Eighth Edition) (“STPG 8th Ed”), incorporating a series of targeted TP amendments that collectively raise expectations around the quality of TP documentation (“TPD”), economic substance, and alignment of domestic TP guidance with global tax developments.

While the overarching framework remains familiar, several areas stand out as particularly meaningful for taxpayers navigating an increasingly rigorous TP environment in Singapore. The STPG 8th Ed introduces strengthened guidance on high-focus areas, including intragroup financing, simplified TPD preparation, strict pass-through cost arrangements and Mutual Agreement Procedure (“MAP”) rules. The launch of the pilot Simplified & Streamlined Approach (“SSA”) also signals IRAS’s intention to reduce disputes in lower-risk areas and further align with Organisation for Economic Co-operation and Development (“OECD”) guidance.

Strengthened guidance on related-party financial transactions

The most substantive updates in the STPG 8th Ed relate to financial transactions, reflecting sustained global emphasis on the pricing and structuring of intra-group funding. IRAS has expanded its guidance on the characterisation, pricing and documentation of related-party financing transactions, including:

• For pricing of domestic related-party loans entered on or after 1 January 2025, taxpayers can choose to apply either the IRAS indicative margin or determine the interest rate based on the arm’s length principle. Importantly, STPG 8th Ed clarifies that IRAS will not impose a TP adjustment (under Section 34D of the Singapore Income Tax Act (“SITA”)) for such domestic loans. Instead, parties’ claim for deduction of interest expense will be assessed under Section 14(1)(a) of the SITA and subject to interest restriction, where appropriate. This is a welcome relief for taxpayers in the form of greater certainty and flexibility to arrange their domestic related-party funding structures.
• IRAS has clarified expectations on periodic reviews for related-party loans to ensure that their pricing and terms remain at arm’s length, particularly as economic conditions, collateral values, or borrower credit profiles evolve. Taxpayers should document each review, assess whether an independent lender would refinance or reprice such loan under comparable circumstances and maintain evidence where no change is needed.
• Clarifications regarding structuring of debt or equity funding - taxpayers should carefully assess their financing models to ensure there is underlying commercial rationale and economic substance. It is important to note that IRAS may disregard or vary arrangements which are connected to tax-avoidance, including treating hybrid instruments differently. Taxpayers should thus plan and document their financing arrangements to withstand such scrutiny.
• IRAS has also clarified that tax deduction will not be allowed on any interest expense in excess of the arm’s length amount determined by IRAS. This is notwithstanding that tax may have been withheld on the full interest payment to the foreign related party.

In recent years, financing arrangements have been a key focus area for IRAS and there has been enhanced guidance in the last few versions of the STPG. While the exemption from TP adjustments for domestic loans (entered on or after 1 January 2025) enhances flexibility for structuring shareholder loans, taxpayers should still review their existing loan portfolios and assess whether pricing remains at arm’s-length, in light of the enhanced guidance of debt vs equity funding.

TPD preparation: Stronger conditions on “Qualifying Past TPD” and strict pass-through costs

The STPG 8th Ed raises expectations for the discipline required when relying on prior-year TPD. IRAS has tightened the conditions under which taxpayers may rely on qualifying past TPD, emphasising the need for a formal declaration, along with the existing conditions that simplified TPD can only be prepared where there are no material changes to the transaction. Simply relying on previously prepared TPD without such a declaration no longer satisfies STPG’s compliance requirements. 

IRAS has also strengthened its rules on strict pass-through costs, clarifying that invoices alone are insufficient as written agreements as they do not reflect an agreement that liabilities relating to the services are assumed by the related parties. Hence, taxpayers must demonstrate their basis for treating certain costs as pass-through, document that the payer performs no value-adding activities and maintains robust written arrangements supporting the pass-through classification.

These refinements signal IRAS’s continued emphasis on documentation quality as a cornerstone for enforcement of TP regulations. The message is clear: convenience-based or informal documentation practices which do not comply with the STPG conditions will not be sufficient. Taxpayers preparing simplified TPD or using pass-through mechanisms should perform internal health checks and ensure proper agreements and documentation are in place before year-end.

MAP and dispute resolution: Clearer pathways and new direction for protective MAP filings

IRAS has refined its MAP guidance to improve procedural clarity and treaty-based dispute resolution. The STPG 8th Ed introduces new guidance on:

• When taxpayers should consider filing a protective MAP within the stipulated time limit where taxpayers are initiating or have initiated domestic objections concurrently.
• The required information when submitting a protective MAP, including clear communication with IRAS that the request is protective in nature.
• How protective MAP interacts with ongoing domestic appeals.
• Expectations around pre-filing discussions, communication with foreign competent authorities, and issuance of confirmation or closing letters.

These enhancements reflect Singapore’s commitment to international best practices, recognising the importance of protective filings in preserving taxpayer’s treaty rights. Taxpayers with emerging or potential TP controversies should evaluate whether early protective MAP filings are warranted in the dispute resolution lifecycle. The refined guidance also suggest a shift toward a more structured and disciplined approach to MAP submissions, requiring taxpayers to be more deliberate in their MAP strategy and supporting analyses.

Launch of pilot SSA: Safe harbour for routine distribution activities

The introduction of the SSA pilot (for the period from 1 January 2026 to 31 December 2028) offers a potentially attractive safe harbour for qualifying routine distribution and marketing support functions, particularly in sectors with thin margins or recurring benchmarking challenges. Under the SSA pilot, qualifying taxpayers who adopt the prescribed margin will be deemed to meet the arm’s-length standard for the qualifying activities.

The pilot SSA may significantly reduce benchmarking requirements and audit exposure for routine functions. Taxpayers with baseline distribution operations should evaluate whether SSA adoption could provide predictability and reduce ongoing compliance costs.

Other notable refinements

In addition to the above major updates, IRAS has refined guidance across several other areas as part of the STPG 8th Ed:

• New examples and clarifications on capital transactions, including withholding tax implications and dispute resolution pathways.
• Expanded discussion on profit attribution to permanent establishments;
• Updated surcharge rules on recalculating the 5% TP surcharge when adjustments change.

Key takeaways and recommended actions

The STPG 8th Ed edition reflects continuity with clearer expectations, rather than a radical overhaul. However, the depth of revisions, particularly in financial transactions, simplified TPD requirements and the introduction of new sections, signals rising expectations on technical quality, transparency and consistency with respect to TP compliances.

Taxpayers should view these changes not as administrative updates, but as signs of a maturing TP enforcement environment. Now is an opportune time to:

• Review financing arrangements,
• Assess pass-through costs classifications and reliance on historical TPD,
• Evaluate MAP and dispute resolution strategies, and
• Consider participation for the SSA pilot.

A proactive TP health check will help taxpayers to identify and assess any potential gaps in their existing TP frameworks and future-proof their TP compliances.