Transfer Pricing

SSA Young Executives Group

17 May 2017

Chintan Shah

1
Maritime Singapore

Employs more than

Maritime More than 5,000 maritime
establishments 170,000 people
Singapore
Is a lifeline of the Singapore
economy

One of the worlds busiest

Contributes 30.9 million*
to 7% of
container hub TEUS of container handled

Singapores ports
GDP *2015 figures

5th Over130
45.2 million* largest ship registry in the world international shipping groups in
tonnes of bunker fuel sales Singapore

*2015 figures

2
Source : MPA
The Singapore Maritime Cluster

Port
activities

Class
Bunkering Ship Societies
Agency

Ship Ship
logistics Mgmt

Ship
R&D /
Training Design
owning/ Shipping
operation
Education Finance

Treasury/
HR/ Legal
Finance

IT/ Admin
Maritime
Marine
Legal &
insurance
Arbtn

Ship
Broking 3
Source : MPA
Transfer pricing Why it matters to Singapore
Shipping Companies

Maritime and Port Authority of Singapore (MPA) while granting Maritime Sector Incentive, specifically
requires the company to prepare transfer pricing documentation as part of its terms and conditions:

MPA while granting Maritime Sector incentive adopts the arms length principle as part of its terms and
conditions while transacting with the related parties :

To the best of our knowledge, IRAS has set up new transfer pricing team who exclusively reviews the related
party transactions.

4
Introduction to Transfer Pricing

Globalisation and regionalization - Rise to a large number of multinational enterprises (MNEs)

More than 60% of the world trade takes place within multinational enterprises leading to
complex issues emerging from transactions entered between enterprises belonging to same Group
General tendency to control profits and transfer the same to low tax heavens Need for
regulation to monitor the possible erosion of tax base
More attention by governments, media and nongovernmental organisations on the international
tax profile of MNEs Now everyone knows what we do!
More information sharing between governments
Public questions about the fairness of tax burdens
Determination of transfer price becomes imperative
Need for arms length pricing principal

5
Why Transfer Pricing ?

To ensure fair share of tax revenue for various jurisdictions.

Parent Co. Dubai Sub Co. Singapore

Market price S$ 120 Cost price S$ 150

Sale price S$ 150
Tax haven Avoidance of tax on S$
30?

To prevent shifting out of profits by

manipulating prices

6
What is Transfer Pricing ?
Transfer pricing refers to the
pricing of the transactions
between related parties.
Due to special relationship
between the related companies,
the transfer pricing may be
different than the price that
would have been agreed between
unrelated companies.
When two related entities enter
into any related parties
transactions, the price at which
they undertake the transaction is
transfer price.
Price between unrelated parties
in uncontrolled conditions is
known as the arms length price
(ALP).
7
Arms Length Principle ?

Related Independent Transfer pricing for tax

Parties entity
purposes is
Transactions
Goods Governed by local jurisdictional
Services authorities.
Intangibles
Many countries have issued formal
Loans
rules regulating transfer pricing
practices.
Regulations, prescribe stringent
documentation requirements and
Resident Resident penalty provisions for non-
compliance.

Transfer Arms
Price length price
8
Transfer pricing example

Transfer pricing planning opportunity

Parent (Country A) Sub (Country B) Consolidated
Total profit reported on tax 7,000 3,000 10,000
return
Tax rate 40% 10%
Tax liability before change to 2800 300 3,100
transfer price
Global effective tax rate 31%
(ETR)
Effect of transfer pricing change on ETR
Total profit after using 3,000 7,000 10,000
transfer pricing to shift
4000 of income
Tax rate 40% 10%
Tax liability after change to 1,200 700 1,900
transfer price
Global ETR 19%
9
Transfer pricing example
Exposure to double taxation

Parent (Country A) Sub (Country B) Consolidated

Total profit reported on tax 3,000 7,000 10,000

return
Tax rate 40% 10%

Tax liability before Country A 1,200 700 1,900

transfer pricing adjustment
Global ETR 19%

Effect of transfer pricing change on ETR

Total profit after adjustment 7,000 7,000 10,000

(increase in profits) by (3,000 + 4,000)
country A of 4,000 (assumes
no correlative relief in B)
Tax rate 40% 10%

Tax liability after Country A 2,800 700 3,500

transfer pricing adjustment
(penalties and interest not
included)
Global ETR 35%
10
Basic issues underlying Transfer Pricing

Cross border tax situations involve issues related to jurisdiction, allocation of income and valuation.

A MNE Group may exploit the opportunity to shrink the overall tax burden of the group through either under-charging or
over-charging the associated entity for intra-group trade:

Loss

A group may transfer the tax loss of an associated enterprise in a jurisdiction where losses cannot be carried forward
beyond the prescribed time limit to a jurisdiction without such restrictions so as to fully utilize the same.

In some cases loss may be transferred to take the benefit of deductions as quickly as possible.

Reduction of taxation not the only factor contributing to the transfer pricing policies and practices of a MNE Group.

Transfer pricing rules are essential for countries (for Tax administration and Tax
Payers) in order to
- Protect their tax base;
- Eliminate double taxation; and
- Enhance cross border trade
11
What do you think of this situation?

Multinational

Country A Country B

Assets

Functions

Risks

Profits $$ $$$$$$$$$$

Is the profit recognized commensurate with value created?

12
Concept - Economic substance

Transfer pricing regulations assumes expected returns are positively and casually
related to functions performed, assets owned and risks assumed by a given entity.
More functions higher expected return
More complex functions higher expected return
More assets owned higher expected return
Intangible assets owned higher expected return
More risks assumed higher expected return

Alignment of profits and value creation

- IRAS subscribes to the BEPS principle that profits should be taxed where the real economic activities
generating the profits are performed and where value is created. Accordingly, the determination of risk for
transfer pricing analysis purposes also is aligned with that under BEPS Actions 8-10.

13
Global Tax Revolution
Global Tax Revolution

Currently MNCs are facing a number of new challenges, including:

Perception that Loss of trust between Loss of trust between
MNCs are not paying tax authorities and tax authorities in
fair share of taxes business different countries

This new global tax environment has resulted in the following actions a Global Tax
Revolution:
Change in tax Changing
authorities behaviours of
approach
OECDs BEPSto OECDs BEPS
tax authorities
interpretation
project project
re tax treaties
of tax law and and tax laws
tax treaties

14
The OECD BEPS initiative

The Organisation for Economic Co-operation and Development (OECD) transfer pricing
guidelines, is widely acknowledged by tax authorities around the globe to determine transfer
pricing.

What is Base Erosion and Profit Shifting (BEPS)?

BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profits
disappear for tax purposes or to shift profits to locations where there is little or no real activity but the
taxes are low, resulting in little or no overall corporate tax being paid OECD FAQs

Transfer pricing is central to the OECDs initiative to combat BEPS.

Transfer pricing now presents not just a financial risk but

also a reputational risk, with many multinational companies
coming under the spotlight of tax administrations

15
BEPS objectives : a new global tax environment

16
Singapore Joins Inclusive Framework as BEPS
Associate for implementing measures against BEPS

Singapore government is on record that it supports the BEPS project and it is clear that
BEPS-related considerations are high on its agenda.

17
 Singapore Joins Inclusive Framework as BEPS
Associate for implementing measures against BEPS

Singapores position on the four BEPS minimum standards

1. Countering harmful tax practices. As with many other jurisdictions, Singapore uses tax incentives to
promote investment in certain areas of the economy. Incentive recipients would have to anchor
substantive operations in Singapore and contribute meaningfully to the growth of the
overall economy. Our tax incentives are legislated and granted for defined periods of time on qualifying
activities. Non-qualifying activities of incentivised companies are taxed at the prevailing corporate tax rate.
We regularly review our tax incentives to ensure that they remain relevant and competitive. As an outcome
of these reviews, we have allowed some tax incentives to lapse and refined several others over the years.
2. Preventing treaty abuse. Singapore does not condone treaty shopping. A number of our bilateral tax
treaties contain anti-treaty shopping provisions to prevent abuse. Singapore is currently part of a group of
jurisdictions working together under the aegis of the OECD and G20 to develop a multilateral instrument
for incorporating BEPS measures into existing bilateral treaties to counter treaty abuse. Singapore will
consider whether to join the instrument after it is finalised and ready for jurisdictions to sign.

Source : Events/Newsroom/Media-Releases-and-Speeches/Media-Releases/2016/Singapore-Joins-Inclusive-Framework-for-Implementing-Measures-against-Base-Erosion-and-Profit-Shifting--BEPS-/
18
 Singapore Joins Inclusive Framework as BEPS
Associate for implementing measures against BEPS

3. Transfer pricing documentation. Singapore adheres to the internationally agreed arms length principle[5]. We will
commit to implement CbCR for financial years beginning on or after 1 Jan 2017 for multinational enterprises whose
ultimate parent entities are in Singapore and whose group turnover exceed S$1,125 million[6]. These enterprises are required to
file the Country-by-Country (CbC) reports with the Inland Revenue Authority of Singapore (IRAS) within 12 months from the
last day of their financial year[7]. IRAS will exchange CbC reports with jurisdictions that Singapore has entered into bilateral
agreements with for automatic exchange of CbCR information, having established that they meet the following conditions:
-First, these jurisdictions have a strong rule of law and can ensure the confidentiality of the information exchanged and prevent its
unauthorised use.
-Second, there must be reciprocity in terms of the information exchanged.
IRAS will consult Singapore-headquartered multinational enterprises further on the implementation details of CbCR, and release these
details by September 2016.
4. Enhancing dispute resolution. IRAS has been active in engaging foreign tax authorities to resolve cross-border tax disputes
via the mutual agreement procedure provided in our bilateral tax treaties[8]. As a BEPS Associate, Singapore will work closely
with other jurisdictions to monitor the implementation of minimum standards on dispute resolution developed under the BEPS
Project. This will complement the other BEPS minimum standards and ensure that taxpayers have access to effective and
expedient dispute resolution mechanisms under bilateral tax treaties.

Source : Events/Newsroom/Media-Releases-and-Speeches/Media-Releases/2016/Singapore-Joins-Inclusive-Framework-for-Implementing-Measures-against-Base-Erosion-and-Profit-Shifting--BEPS-/
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Transfer Pricing in Singapore

2006 2008 2009 2010 2015

2016

Introduction Transfer Transfer Section 34D Revised Revised transfer pricing

of transfer pricing pricing introduced transfer guidelines (3rd edition)
pricing consultation guidelines for transfer pricing OECDs Inclusive
guidelines process related party pricing is now guidelines (2nd framework for
loans and part of the edition) implementing measures
Administrative related party Income Tax against BEPS
guidance on services Act Introduced to file CbC
advance report for Singapore
pricing MNEs
agreements New form for disclosure
RPT
Enacted Common
Reporting Standard
New E-tax guide on
In 2017, IRAS released its fourth edition of transfer pricing general anti avoidance
guidelines provision
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Transfer Pricing in Singapore

The most striking change is the explicit requirement for Singapore taxpayers to prepare
contemporaneous transfer pricing documentation to support the pricing of transactions
with related parties

Contemporaneous - Transfer pricing documentation should be prepared prior to or at the

time of undertaking the transactions, and including up to the time of preparing the relevant tax
returns

If transfer pricing documentation is not prepared then this may attract transfer pricing
adjustments and penalties under the law

In addition, IRAS may not be as supportive of the transfer pricing positions of the taxpayer when
it comes to voluntary adjustments or negotiations with other tax authorities to eliminate or
mitigate double taxation (Mutual Agreement Procedure and Advanced Pricing Agreements)

21
BEPS Action 13 TP documentation & CbC reporting

Master file
Broad information about the MNCs business, transfer pricing
policies and agreements with tax authorities in a single
document available to all tax authorities where the MNC has
operations. CbCR
Broad information about the jurisdictional allocation of profits,
revenues, employees and assets.
Local file
Detailed information about the local business including related
party payments and receipts for products, services, royalties,
interest etc.

The IRAS transfer pricing guidelines updated in January 2015 The IRAS issued guidelines on CbC reporting for Singapore
are broadly in line with Action 13 Master file and local file MNEs on 10 October 2016 that generally are aligned with
approach. Action 13.

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What is Transfer Pricing Documentation?
Transfer pricing documentation records kept by taxpayers to show that efforts have been made
to ensure that their related party transactions are concluded at arms length.
Group information
Worldwide organisational structure
with ownership linkages
Groups business activities, principal
activities of each party
Products and services, markets and
competitors
Industry profile in which the company
operates
Important drivers of profit, including
a list of intangibles and the related
parties that legally own them
Business information / relationships
amongst all related parties
Singapore entity
information
General information of Singapore
taxpayer
Entities business models and
strategies (past, present and future)
Entitys functions, risks and assets
employed
Financial statements
Description of the management
structure of the Singapore taxpayer,
including a description of the related
parties to whom the Singapore
management reports
Organisational chart showing number
of employees
Transaction
information
Detailed information of all
transactions with related parties
Contracts/agreements to substantiate
the terms of transactions
Segmental financial information for
each of the transactions along with the
basis of derivation of segmental
accounts
Transfer Pricing
Analysis
Choice of transfer pricing method
Choice of tested party with reasons
substantiating the choice
Details on comparable companies
Comparability analysis
Details of adjustments made, if any
Determination of arms length price /
margin
Use of range, if required
Testing the transaction against arms
length outcomes
23
Instances where transfer pricing documentation
is not required
Taxpayers are not expected to prepare TP documentation under the
following situations:

Transactions between local related party and income from transactions taxed at same rate
1
2 Loan transactions between local related parties, if lender is not in the business of borrowing and lending

3 Where a company applies the indicative margin for related party loans with certain conditions

4 Provision of prescribed routine services covered by the safe harbour cost +5%

5 Related party transactions covered by an agreement under APA

6 Value of other types of related party transactions does not exceed specified thresholds (see table below)

24
Instances where transfer pricing documentation
is not required
Category of related party transactions Threshold (S$) per financial year
Purchase of goods from all related parties 15m
Sale of goods from all related parties 15m
Loans owed to all related parties 15m
Loans owed by all related parties 15m
All other categories of related party transactions. Examples:
Service income
Service payment
Royalty income
Royalty expense
Rental income 1m per category of transactions
Rental expense
Guarantee income
Guarantee payment
For the purpose of determining if the threshold is met, aggregation should be done
for each category of related party transactions. For example, all service income
received from related parties is to be aggregated. 25
Transfer pricing Why has Singapore become
Vigilant?

Assure OECD and the world, Singapore is not tax haven. (Refer to Oxfam report)

Share information with other tax jurisdictions information exchange and transparency
-Implementation of CbC reporting, new RPT reporting form, implementation of Common
Reporting Standards, General Anti-Avoidance provisions.

Defend against other aggressive tax jurisdictions.

Protect its own tax base.

Substance required to access tax incentives.

26
Common Audit Triggers for Transfer Pricing

Non-compliance with documentation requirements

Large quantum of related party transactions

Regional functions with no charge outs Possible sources of information for the IRAS

Huge variation in tax payable in ECI filing vs final tax payable in tax computation Tax computations

Annual reports and financial statements

Start-up losses for more than two years
Company websites, news articles
Lower profits or losses for extended period, but expanding operations
Transfer pricing databases, e.g. Thomson Reuters,
Bloomberg.
Fluctuating profit patterns inconsistent with profile
Exchange of information article in tax treaties
Transactions with related parties in tax havens

High-risk transactions, such as royalties and services

Significant drops in profit after termination of tax incentive

27
Transfer pricing controversy in Singapore
Trends and observations

Examples of transfer pricing focus areas from the IRAS

Type of transaction
Sales and purchases
Provision or recipient of services
Use of intangible property or sole
distribution rights
IRAS queries
Existence of transfer pricing policy
Whether there are comparable transactions with third parties and the profit margins
of these transactions
Reasons for recurring losses
Mark-up applied to cost base
Components of cost base
Characterization of pass-through cost
Basis of charge and methodology
How the services benefit the Singapore taxpayer with evidence (if the Singapore
taxpayer is the recipient of the services)
Royalty rates and methodology
Nature of change

Taxpayers with transfer pricing documentation and appropriate processes in place are always
in a better position to respond to the IRAS queries.
28
What does this mean for taxpayers?

Never prepared any formal Assess your documentation needs (Global HQ/Regional HQ/Singapore
TP documentation subsidiary)
Analyse gaps in TP documentation and polices
Identify sources of information (e.g. HQ)
Start preparing TP documentation and consider putting in place formal
TP Policy
Prepared TP Refresh analyses e.g. functional analysis, benchmarking studies
documentation years ago
Update with more information (e.g. value chain, supply chain) and prepare
other pieces of documents (e.g. TP policy, intercompany agreement) in line
with new Requirements
Prepared TP Evaluate gaps in information based on new requirements
documentation for latest
Prepare and maintain information that is not in the existing
financial year recently
documentation (e.g. value chain, supply chain) separately or consider
updating the documentation
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Case Study Transfer pricing planning strategy

Facts of the case:

1. The group is based in Singapore and is involved in
the business of ship management, ship owning,
Loan trading of bunkers, etc.
2. The group is growing and its management decided
Singapore to expand to the UK. Singapore entity then acquired
the UK entity. Singapore entity is the parent
UK company and UK entity is the subsidiary.
Support services

Parental
Loan 3. UK entity will then be involved in trading of bunkers
guarantee
$20m in the European market.
4. The acquisition of the UK entity was funded by a
combination of bank loans from third party banks in
the UK and subject to parental guarantee provided
to the banks by the Singapore parent company and
subordinated loans direct from the parent to the UK
Loan related entity.
$100m
Investment 5. The issue was to price the related party transactions
company in a way to reduce the overall effective tax rate.

Purchase
$200m

Bunkers 30
Case Study Transfer pricing planning strategy

Benefits of transfer pricing:

1. Shift income from UK to Singapore, to reduce
overall effective tax rate (tax rate differential is
Loan currently 13%, assuming UK tax rate of 30% and
Singapore tax rate of 17%).
Singapore 2. Maximise post-tax return on investment.
UK 3. Maximise return to shareholders.
Support services

Parental
Loan Example of benefits:
guarantee Arms length payments
$20m
1. Guarantee fee 1. Introduce arms length guarantee fee to Singapore of
2. Interest rate on loan 150 bps in respect of external funding of $100m:
3. Fee for services provided annual reduction in overall tax burden of $195,000
($ 100m*1.5%*13%).
2. Structure terms of intra-group loan of $20m from
Loan Singapore entity to UK entity at an arms length
$100m interest rate of 1%: annual reduction in overall tax
Investment burden of $26,000 ($20m*1%*13%).
company
3. Introduce fee for support services provided by
Singapore on cost plus mark-up basis, amounting to
Purchase e.g. $100,000 per year: annual reduction in overall
$200m
tax burden of $ 13000 ($100000*13%).

Bunkers 31
Closing remarks

Tax and Transfer Pricing scrutiny is on rise.

It has been 11 years since the IRAS first issued its transfer pricing guidelines and 7 years since
the arms length principle was legislated there is a clear expectation that taxpayers should now
be more informed about transfer pricing requirements.

Aligning transfer pricing model in line with business and commercial reality, deployed and
implemented in accordance with the arms length principle.

Precaution is better than cure! - A company that undertakes pro-active transfer pricing planning
and diligently prepares and maintains adequate and timely transfer pricing documentation
stands the best chance of satisfying IRAS that it has complied with the arms length principle.
Being pro-active is paramount!

32
Annexures

33
Unprecedented focus on the morality of
multinationals tax affair.

Google Apple Starbucks

2012 2011 2010 2012 2011 2010 2012 2011 2010
Net revenues by Operating segment
Earnings before income taxes (US) 5311 4963 4948 23733 13538 7590 1679 1523 1308
Earnings before income taxes (Rest of the world) 8075 7633 5848 39883 26838 15306 379 287 128
Total 13386 12596 10796 63616 40376 22896 2058 1810 1436
Taxes
US Taxes 2513 1998 2115 13317 7681 4366 546 406 538
Foreign Taxes 358 248 167 713 602 161 77 37 38
Total 2871 2246 2282 14030 8283 4527 623 443 576
Effective Tax Rate
US ETR (state + federal taxes) 47.3% 40.3% 42.7% 56.1% 56.7% 57.5% 32.5% 26.7% 41.1%
Foreign Effective Tax Rate 4.4% 3.2% 2.9% 1.8% 2.2% 1.1% 20.3% 12.9% 29.7%
Global Effective Tax Rate 25.9% 21.8% 22.8% 28.9% 29.5% 29.3% 26.4% 19.8% 35.4%

Apple is being scrutinised by European officials, who accuse the company of using subsidiaries in Ireland to avoid paying
taxes on revenue generated abroad. While apple generates about 60 percent of its sales outside the U.S., its foreign tax rate
is 1.8 percent, according to Bloomberg Intelligence analyst Matt Larson
Amount in US $ millions 34
Singapore fifth worst tax haven in the world: Oxfam

Months after committing to a global initiative to curb tax avoidance, Singapore has again come under the spotlight for its
regime that allows companies to legally but artificially shift profits across borders to keep overall corporate taxes low.
A new report, titled Tax Battles: the dangerous global race to the bottom on corporate tax, was released on Monday (Dec
12) by United Kingdom-based charity organisation Oxfam, which examined the extent to which countries encourage
corporate tax avoidance. Oxfam named Singapore the fifth worst corporate tax haven for its lack of withholding taxes, its
range of tax incentives, and evidence of substantial profit shifting.
The Ministry of Finance (MOF) defended Singapores tax regime and said parts of the Oxfam report were inaccurate. We
note that the report cites the lack of withholding taxes as one of the characteristics of our regime. This is inaccurate.
Withholding tax (for example, interest, royalty, services, etc.) is applicable for payments made to non-resident persons.
Singapore does not impose withholding tax on dividends due to our one-tier corporate tax system. Under this system,
profits are taxed at the corporate level and is a final tax, the MOF said.
Singapore came after Bermuda, Cayman Islands, Netherlands and Switzerland in Oxfams ranking of 15 worst tax havens
in the world. The only other Asian city in the list is Hong Kong at ninth place.

Source: http://www.todayonline.com/business/singapore-fifth-worst-tax-haven-world-oxfam dated December 12, 2016

35
New Related Party Transaction reporting (Form C)

1. Effective: Year of Assessment 2018

2. Scope: Companies will be required to complete a new form for reporting of Related Party Transactions (RPT Form)
only if the value of RPT exceeds S$15 million
-Test of whether value of RPT exceed S$15m:
The value of RPT as disclosed in the audited accounts is the aggregate of:
a. All amounts of RPT as reported in the Income Statement but excluding compensation paid to key management
personnel and dividends; and
b. Year-end balances of loans and non-trade amounts due to/ from all related parties
3. RPT reporting requirement
-state in Form C whether the value of RPT as disclosed in the audited accounts exceeds S$15 millions for the relevant Year of
Assessment. If the value of RPT exceeds S$15 million, the company has to complete the RPT form and submit it together with
Form C.

36
Interest Rate Safe-Harbour

Para 13.27 -13.35 of TP Guidelines 4th edition: Not compulsory but alternative to performing detailed transfer pricing
analysis on their eligible related party loans. If safe-harbour not adopted, will need to support margin with TP
analysis and documentation.
1. Effective date: Related party loans obtained or provided from 1 January 2017 onwards
2. Eligible related party loans: Quantum not exceeding S$15 million (including committed but not utilized) at
the time the loan is obtained or provided. Both the Singapore-denominated and foreign currency denominated
eligible related party loans. Foreign currency denominated related party loan, the SGD equivalent of the loan
amount is to be determined based on the prevailing exchange rate at the time the loan is obtained or provided.
3. Indicative margin at the start of each year published on the IRAS:
Loans between 1 January 2017 to 31 December 2017 indicative rate: +250 bps (2.50%)
(https://www.iras.gov.sg/irashome/Businesses/Companies/Working-out-Corporate-Income-Taxes/Specific-
topics/Transfer-Pricing/Other-Issues/)
4. How it Works
Apply the indicative margin to an appropriate base reference rate as appropriate. e.g. Singapore Govt Securities
yield for fixed rate loans, SIBOR or LIBOR for floating rate loans.

37
Country-by-Country Reporting

Country-by-Country Reporting (CbCR) is a form of reporting by multinational enterprises (MNEs) initiated by

the Organisation for Economic Co-operation and Development (OECD) in the Base Erosion and Profit Shifting
(BEPS) Action 13 Report. In keeping with Singapores commitment to implement certain measures under the
BEPS Project, Singapore-headquartered MNEs meeting certain conditions are required to prepare and file CbC
Reports to IRAS for financial years (FYs) beginning on or after 1 Jan 2017.
Some jurisdictions would be implementing CbCR for FY beginning on or after 1 Jan 2016. To address the
transition issue arising from this, affected Singapore-headquartered MNEs may file a CbC Report for FY
beginning on or after 1 Jan 2016 to IRAS on a voluntary basis, i.e. Voluntary Filing.
A CbC Report of the MNE group will include information on the groups global allocation of the income and
taxes paid in different countries and other financial data. CbC Reports submitted to IRAS will be provided to
tax authorities of countries with which Singapore has signed bilateral agreements for automatic exchange of
CbCR information. CbC Reports may be used by Singapore and other tax authorities in evaluating transfer
pricing risks and other BEPS related risks.

38
BEPS Action 13
New Chapter V: CbC 3 Financial Data by Country

Annex III to Chapter V

Transfer pricing documentation Country-by-Country Report
A. Model template for the Country-by-Country Report

39
BEPS Action 13
New Chapter V: CbC 3 Financial Data by Country

40
Country-by-Country Reporting Who and When

Who needs to file the CbC Report

The ultimate parent entity of the Singapore MNE group will be required to file a CbC Report for all entities in the
group. The MNE group is required to submit the CbC Report if it meets all of the following conditions:

1. The ultimate parent entity of the MNE group is tax resident in Singapore;
2. Consolidated group revenue for the MNE group in the preceding financial year is at least S$1,125 million; and
3.The MNE group has subsidiaries or operations in at least one foreign country.
When CbC Report should be submitted
Within 12 months from the end of the ultimate parent entity's financial year.
Example: Ultimate parent entity's FY ends in December:
The first set of CbC Report will relate to the financial period 1 Jan 2017 to 31 Dec 2017 (FY 2017). This
should be submitted to IRAS no later than 31 Dec 2018.
Ultimate parent entity's FY ends in March:
The first set of CbC Report will relate to the financial period 1 Apr 2017 to 31 Mar 2018 (FY 2017). This
should be submitted to IRAS no later than 31 Mar 2019.

41
 Thank You!

Chintan
Manager
Complete Corporate Services Pte Ltd
chintanshah@complete-corp.com.sg
+65 63292718
+65 84363857

Disclaimer: This is a general presentation for information and educational purposes only and should not be construed as a professional advice. All rights reserved. The recipient
should not further circulate or use this material in any manner without prior consent of the author.

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