Transfer Pricing Advisory
Transfer pricing documentation (local/master/country by country). We serve as a transfer pricing consultant, providing support in liaising with the tax authorities and defending your transfer pricing reports when it comes to tax audits. We serve clients in Singapore and overseas from various industries and jurisdictions.
Transfer pricing documentation (local/master/country by country). We serve as a transfer pricing consultant, providing support in liaising with the tax authorities and defending your transfer pricing reports when it comes to tax audits. We serve clients in Singapore and overseas from various industries and jurisdictions.
- How to prepare Transfer Pricing Documentation report
- Perform Benchmarking and comparability studies for transfer pricing purposes
- How to plan and implement Transfer Pricing
- Resolve Transfer Pricing disputes and audit queries from IRAS or overseas tax authorities
Companies that are required to prepare Transfer Pricing documentation reports have annual revenue is at least S$10 million for each financial year and the related party transactions met the following threshold table:
Taxpayers do not need to submit the transfer pricing documentation when they file their Income Tax Returns. They are, however, required to submit the transfer pricing documentation within 30 days of a request by IRAS.
Benchmarking studies play a crucial role in any transfer pricing documentation and are a necessary defence for compliance purposes. They are carried out to understand how a company prices its related party transactions, and seek to validate that their pricing was done at arm’s length by reference to independent and comparable transactions.
The purpose is to find out the general conditions of the transactions conducted between international related parties. These studies will generate a range of values: referred to as the mark-up range or arm’s length range . Statistically, the arm’s length range is defined by the upper quartile and lower quartile, comprising the range of values of price or profit attached to the related party transactions between unrelated parties that are in the same or similar circumstances.
If a transfer price or profit level lies outside of the applicable arm’s length range, the tax authority will take the median value.
We provide guidance to businesses regarding the optimal management of their transfer pricing life cycle. The life cycle encompasses four phases: planning, implementation, documentation, and monitoring. Although most companies focus on the first three phases, the changing tax landscape has made it necessary for companies to manage new pressures, such as increased data collection and information sharing among tax authorities by the active monitoring of their transfer pricing positions. To effectively handle these evolving pressures, it is imperative for companies to develop a well-defined approach that can effectively manage and minimise the risks associated with transfer pricing .
Because there is increased scrutiny by tax authorities worldwide, a transfer pricing audit poses a big risk to multinational corporations and organisations from both the tax planning and compliance perspectives. Amazon, Adobe, AOL, Microsoft, Hewlett-Packard, and other large multinationals have all made the headlines in recent years due to disputes in transfer pricing over potential adjustments to income that ranges from tens of millions to over a billion dollars. But if you think transfer pricing affects only big companies, this is where people are often mistaken. Transfer pricing is only triggered when there is an existence of multiple facilities in more than one taxing jurisdiction.
Our achievements include:-
Best Transfer Pricing Advisory Specialists – Singapore at APAC Insider South East Asia Business Awards 2022
Max Lewis Consultants was presented with the award by APAC Insider, a publication that honours the most committed, creative, and results-oriented companies and individuals from the Asia Pacific region.
The South East Asia Business Awards aims to recognise companies and individuals who have strived for excellence in their respective sectors through perseverance, merit, and dedication. In 2022, the award aims to recognise companies and individuals who excelled during the global pandemic, demonstrating exceptional adaptability and creativity in overcoming challenges.
Best Transfer Pricing Consultancy Firm of the Year at Corporate LiveWire Global Awards
The award was presented to Max Lewis Consultants by Corporate LiveWire, a global platform that provides the corporate sector with the latest news and developments from around the world. This award honours the firm that has rendered the best transfer pricing services across multiple sectors, offering outstanding results in the corporate sector.
The award recognises the accomplishments of top business individuals and firms that have produced remarkable results, prioritised customer service, and used innovative approaches for exceptional business performance. Nominees were assessed based on how effective their processes, products, or ideas are in transforming their industries.
Sale and purchase of goods between related parties
- Devised transfer pricing documentation for a large main-board listed company in the leather furniture business with factories in Southern China and responsible for liaising with the local tax department.
- Devised transfer pricing documentation for a Japanese MNC involved in trading of electronic components.
- Devised transfer pricing documentation for a German MNC involved in the manufacturing of formworks systems and support services.
- Devised transfer pricing documentation for a Singapore marine fuel bunker supplier, with operations in Singapore, China and Dubai, United Arab Emirates (UAE).
- Devised transfer pricing documentation for an oil trader, broker and dealers in various petroleum products.
- Devised transfer pricing documentation for a Japanese trading house involved in processed tubes.
- Devised transfer pricing documentation for a Malaysian company involved in fabrication of aluminium, fiberglass and powder coating products.
- Devised transfer pricing documentation for a Singapore subsidiary of a China parent company engaged in the trading of motor vehicles parts.
- Devised transfer pricing documentation for a logistics company involved in the leasing of containers, trailers and prime movers.
- Devised transfer pricing documentation for a Korean MNC involved in the general wholesale trade in the basic feedstock of the petrochemical industry.
- Devised transfer pricing documentation for a local company selling marine products and services.
- Devised transfer pricing documentation for a Malaysian company involved in the construction of waterways and to provide water treatment services.
Intercompany service charge between related companies or between parent and subsidiaries
- Tested the reasonableness of the management fee charge between a Singapore local property agent services firm with holding company in China.
- Tested the reasonableness of the royalty fee charged for the use of payroll software in Malaysia and Singapore .
- Devised transfer pricing documentation for a shipping agency with operations in Middle East, India and South-East Asia.
- Devised transfer pricing documentation for an investment holding company involved in intercompany service fee charge with China parent company.
- Devised transfer pricing documentation for a local SME providing cable engineering works and project management services.
Loans between related parties and intra-group financing
- Performed transfer pricing benchmark study for related party loans for a logistics company.
- Helped benchmark a related party loan from an overseas parent to its Singapore subsidiary.
- Transfer pricing analysis for a China textile group giving related party loans to subsidiaries.
Cost sharing, Cost Contribution Agreement, Guarantees provided between related parties
- Implement Cost Sharing Agreement for a India telecom conglomerate group.
- Implement Cost Contribution Agreement for a financial services group in Australia.
- Ensure the guarantee fees charged by a parent to its subsidiary for a bank loan conform to arm’s length principle.
Benchmarking and comparability studies to test arm’s length prices between related parties
- Benchmarking and comparability studies to propose appropriate licence fee and service fee between related companies for a blockchain games developer.
- Benchmarking and comparability studies to propose appropriate licence fee and service fee between related companies for a SaaS (Software-as-a-Service) group involved in developing and owing an all-in-one software platform, which is specifically for recruitment and staffing agencies globally.
- Benchmarking and comparability studies to propose appropriate service fee between a wines and spirits distributor in Singapore and its UK related companies.
- Benchmarking and comparability studies to propose appropriate licence fee charge our rate for a UAE related entity and the Singapore company involved in the software on-demand platform provider in the cleaning industry.
- Benchmarking and comparability studies to propose appropriate service fee between Singapore and Indian parent for a digital marketing services company.
Transfer of Intangible assets like trademarks, patents and licences between related parties
- Transfer pricing analysis for sale of trademarks for a USA MNC to Singapore subsidiary.
- Transfer pricing analysis into the transfer of technical know-how from Singapore subsidiary to an Italian parent company.
- Transfer pricing analysis into the transfer of trademark from Singapore holding company to Hong Kong parent company.
- Transfer pricing analysis into the transfer of patents from Singapore to USA related company involved in the cloud-based managed services solutions for the hospitality industry.
- Purchase of trademarks from a related entity for a food and beverage entity with operations in South East Asia.
Resolve transfer pricing audit queries and disputes
- Defended a client who has a subsidiary in Batam, Indonesia that is involved in the manufacturing of paper cartons and boxes on transfer pricing matters and devised their transfer pricing policies and documentation.
- Resolved transfer pricing queries for a Singapore e-commerce entity.
Advise and implement cash pooling structures
- Analyse a German manufacturer’s cash pooling arrangement to ensure transfer pricing compliance.
- Prepare and implement cost pooling structure for a MNC involved in the manufacture and repair of automation system with world-wide operations.
We have a team of highly qualified in-house experts:
- Masters of International Taxation (New South Wales);
- Accredited Tax Advisor (Income Tax & GST), SCTP Singapore;
- Chartered Tax Adviser (Australia), Tax Institute of Australia;
- Fellow of the Taxation Institute of Hong Kong (TIHK);
- Member of the Tax Executive Institute (TEI),USA;
- Advanced Diploma in International Tax, Chartered Institute of Taxation;
- Advanced Professional Certificate in International Taxation (APCIT).
- Diploma in Transfer Pricing, Association of Taxation Technicians (UK).
What is transfer pricing?
Transfer pricing is establishing appropriate prices between two or more related enterprises as if they are independent, unconnected third parties. This process is referred to as the arm’s length principle.
These enterprises are related when they have pre-existing connections that make them interdependent. These connections can be either direct or indirect. The two enterprises can be related as wholly-owned or majority-owned subsidiaries, or affiliates with shareholdings held by another group or company, or they can be commonly controlled by a larger, overarching enterprise.
Between these related enterprises, they may exchange goods and services such as sales or purchase of goods, licensing of software rights or secondment of manpower services under each enterprise.
Why is transfer pricing important?
Transfer pricing rules are meant to promote international trade and ensure a level playing field in the competition for tax revenue between countries while preventing tax evasion or abusive practices.
A business is liable to enter legal trouble or penalties if the matter of Transfer Pricing were to be ignored, no matter if one’s business is an SME or a multinational corporation.
What are some of the guidelines of transfer pricing in Singapore?
Most tax authorities accept and recognise the five primary methods of transfer pricing outlined in the OECD Transfer Pricing Guidelines. These five methods are the comparable uncontrolled price method, the transactional profit split method, the resale price method, the cost plus method and the transactional net margin method. Businesses and authorities use these methods to determine transfer prices. Arm’s length transfer prices are calculated by comparing the profits of similar third-party organisations and comparable transactions.
How often should taxpayers prepare TP documentation?
IRAS has made it clear that transfer pricing documentation reports should be contemporary, meaning taxpayers should do reports during the current time. Therefore, the transfer pricing report must be done for each financial year starting from 31 Dec 2018 or YA 2019, when the current transfer pricing guidelines came into effect.
Is it true that IRAS allows taxpayers to produce simplified documentation, and if yes, what kind of conditions need to be fulfilled?
IRAS allows taxpayers to use the transfer pricing documentation they have prepared previously to support the transfer price if that past transfer pricing documentation is a qualifying past transfer pricing documentation.
Past transfer pricing documentation that qualifies as a “qualifying past TP documentation” includes documents that were prepared in the previous one or two years (i.e., TPD prepared in Year 1 can potentially be used for Years 2 and 3, whereas a major update/new TPD is required for Year 4), provided that the following conditions are also met:
a) The transaction documented in the past transfer pricing documentation is the same type as the transaction in the current year;
b) The transaction documented in the past transfer pricing documentations are undertaken with the same related parties;
c) Previous was prepared correspondingly with the requirements under the Rules, properly prepared and dated in English.
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