The Inland Revenue Authority of Singapore (IRAS) has issued the 8th Edition of its Transfer Pricing Guidelines (TPG), effective 19 November 2025. The updates introduce significant compliance relief for related party domestic loans, a new optional Simplified and Streamlined Approach (SSA) for baseline distribution activities, and several clarifications on documentation, dispute resolution and PE profit attribution.
Domestic Loans – Material Compliance Relief
For related party domestic loans entered into on or after 1 January 2025 where neither party is in the business of borrowing and lending, IRAS will not make any transfer pricing adjustment under Section 34D of the Income Tax Act, nor request TP documentation. Taxpayers may apply the IRAS indicative margin (any amount) or determine an arm’s length rate. Interest deductibility under Section 14(1)(a) remains unchanged – a zero‑interest loan will not give rise to a deduction for the lender.
Legacy loans (entered before 1 January 2025) continue to be governed by the interest restriction as a proxy for arm’s length.
New Section 19 – Simplified and Streamlined Approach (SSA)
IRAS is implementing the OECD’s SSA (formerly Amount B) on a pilot basis from 1 Jan 2026 to 31 Dec 2028. Taxpayers may opt to apply the SSA to qualifying baseline marketing and distribution transactions if:
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The transaction is a buy‑sell or sales agency/commissionaire arrangement for wholesale distribution (excluding commodities);
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A one‑sided method (e.g., TNMM) can be reliably applied; and
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The tested party’s operating expense to net revenue ratio is between 3% and 30%.
The SSA uses a pricing matrix and an operating expense cap‑and‑collar cross‑check (generally 10%–70%). Year‑end true‑up or true‑down adjustments are mandatory once the SSA is elected. The outcome is treated as arm’s length by IRAS, but is non‑binding on the counterparty jurisdiction. Double taxation may be resolved via MAP.
Other Notable Updates
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Simplified TP documentation now expressly requires a declaration that a qualifying past TPD remains accurate. Without the declaration, no valid TPD under Section 34F exists.
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TPD for loans must be reviewed annually, but repricing is not required if evidence shows independent parties would not reprice (e.g., fixed‑rate comparable loans, floating rates with unchanged credit margin).
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Protective MAP allows a taxpayer to file a MAP application within the DTA time limit while pursuing domestic legal remedies, preserving MAP rights.
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PE profit attribution follows the Business Profits Article of the relevant DTA; IRAS does not endorse the AOA’s “free capital” concept. A PE with no attributable profit and no other Singapore presence need not file a tax return.
These changes take effect for YA 2026 onwards. Taxpayers should review existing related party loans, assess eligibility for the SSA, and update TP documentation practices accordingly.