The Inland Revenue Authority of Singapore (IRAS) has released the 8th edition of the Transfer Pricing Guidelines (TPG), introducing a pilot implementation of the Simplified and Streamlined Approach (SSA) for baseline marketing and distribution activities. The pilot runs from 1 January 2026 to 31 December 2028.

The introduction of the SSA follows Singapore’s alignment with the OECD/G20 Inclusive Framework’s “Amount B” model for standardized returns to routine distribution activities, as set out in the Consolidated Report on Amount B (24 February 2025). Taxpayers applying the SSA must also observe the Annex to Chapter IV of the OECD TPG, relating to baseline distribution functions.

1. Key Features of the SSA Pilot Framework

1.1 Qualifying Conditions

The TPG outlines criteria defining when a tested party qualifies for the SSA. While the IRAS has not materially departed from the OECD Amount B profile, taxpayers should expect conditions relating to:

• nature of distribution activity (routine, non-strategic),
• absence of complex intangibles or risks,
• standardised functional profile, and
• revenue-based thresholds.

Businesses with mixed-function distribution models may face practical segmentation challenges.

1.2 Determination of Return on Sales (RoS)

The SSA prescribes a fixed, standardised RoS range for qualifying distributors, consistent with Amount B’s simplification objective. This eliminates the need for annual benchmarking studies within the SSA period.

Practical impact:

• reduces compliance effort,
• enhances tax certainty,
• limits taxpayer flexibility if actual margins deviate significantly from the SSA range.

1.3 Documentation Requirements

Although simplified, the SSA requires taxpayers to demonstrate:

• confirmation of meeting all qualifying conditions;
• application of the prescribed RoS;
• consistency with the OECD Amount B Annex.

Non-compliance may trigger adjustments or loss of SSA eligibility.

1.4 Inclusive Framework Commitment (2025–2029)

The guidelines reflect the Inclusive Framework’s political commitment for jurisdictions adopting Amount B between 1 January 2025 and 31 December 2029, supporting a standard global approach to routine distribution pricing.

2. Key Amendments in the 8th Edition of the TPG

2.1 Use of Past TP Documentation (Para 6.35)

Taxpayers relying on qualifying past TP documentation without making the required declaration will not be regarded as having prepared simplified TP documentation under s 34F ITA.

Practical issue: Risk of non-compliance penalties if past-year documentation is used informally. Taxpayers should formalise declarations or prepare full TP documentation.

2.2 Mutual Agreement Procedure (MAP) – Flexibilities Added

(a) MAP applications when domestic remedies undecided (Para 10.56)
Taxpayers may submit a MAP request within the DTA time limit even if still considering domestic legal remedies.
This provides protection against time bars.

(b) Protective MAP filings allowed (Para 10.57)
IRAS now explicitly recognises protective MAP filings to secure treaty relief timelines.

Practical issue: Ensures certainty for taxpayers facing foreign audit adjustments with ongoing disputes or incomplete information.

2.3 Pre-Application Meetings for MAP (Para 11.3)

Taxpayers requesting a pre-MAP meeting must provide detailed information (per TPG para 11.6(a)–(k)) at least one month before the meeting.
This increases administrative preparation but may reduce iterative IRAS queries.

3. Domestic Loans: No s 34D TP Adjustments from 1 January 2025 (Para 15.22)

IRAS will not impose transfer pricing adjustments under s 34D ITA for related-party domestic loans entered into on or after 1 January 2025, provided both parties are not in the business of borrowing and lending.

Additionally, IRAS will not require TP documentation for such loans.

However:

• interest deductibility remains subject to s 14(1)(a), and
• interest restriction rules still apply.

Practical issues:

• While TP compliance is eliminated, taxpayers must still assess commerciality and deductibility under domestic provisions.
• Cash-pooling or treasury-type entities may fall outside this concession.

4. Practical Implications

4.1 Evaluate Eligibility for SSA Early

Entities with distribution activities should conduct a functional and financial assessment to determine SSA eligibility before FY2026.

4.2 Review Intercompany Agreements

Contracts should reflect SSA-based returns where applicable and ensure alignment with OECD Amount B principles.

4.3 Strengthen MAP Readiness

Given the expanded MAP options and timelines:

• maintain robust audit files,
• prepare for cross-border controversy events,
• consider protective MAP filings where foreign assessments are anticipated.

4.4 Update TP Documentation Policies

Taxpayers must ensure correct declarations under s 34F when relying on previous-year documentation.

4.5 Review Domestic Financing Arrangements

Although s 34D adjustments no longer apply for non-lending domestic parties, documentation supporting:

• purpose of loan,
• arm’s-length level of interest, and
• deductibility criteria
  should still be maintained for tax audit purposes.

Source: IRAS, 20 November 2025