The Inland Revenue Authority of Singapore (IRAS) has updated its transfer pricing guidance to clarify which persons may be treated as related parties and how certain payments should be considered when determining the value of transactions reported in the Related Party Transactions Form.
The clarification is relevant to companies reviewing their related-party population, transfer pricing obligations and annual corporate income tax filing processes.
Key developments
IRAS has clarified that the concept of a related party is not limited to companies or other business entities. Individuals, including shareholders and directors, may also be related parties where they satisfy the definition in section 2 of the Income Tax Act 1947.
IRAS has also confirmed that directors’ fees should not be included when calculating the value of related-party transactions reported in the Related Party Transactions Form.
Singapore taxpayers remain required to apply the arm’s length principle to transactions with related parties and, where applicable, maintain contemporaneous transfer pricing documentation supporting their pricing arrangements.
Impact on businesses
Broader identification of related parties
Companies should consider individuals as well as entities when establishing their related-party registers. Transactions involving controlling shareholders, directors or other individuals with relevant ownership or control relationships may fall within the transfer pricing framework.
The clarification may be particularly relevant to owner-managed businesses, family-controlled groups and companies in which directors or shareholders enter into financial or commercial arrangements with the company.
Transfer pricing analysis may be required
Payments or transactions involving a related individual may need to be assessed under the arm’s length principle. Depending on their nature and materiality, these may include:
- loans, advances or other financing arrangements;
- rental or property transactions;
- asset sales and purchases;
- management, consultancy or professional services; and
- guarantees or other forms of financial support.
Businesses should not assume that a transaction falls outside the transfer pricing rules merely because the counterparty is an individual rather than a corporate entity.
Effect on RPT Form calculations
The exclusion of directors’ fees may reduce the total transaction value used for RPT Form reporting. This may affect whether a company exceeds the applicable reporting threshold and the amounts disclosed in the form.
However, the exclusion relates specifically to directors’ fees. Companies should distinguish such fees from other payments made to directors, shareholders or connected persons, which may still represent related-party transactions.
Financial reporting and audit considerations
Although directors’ fees are excluded from the RPT Form transaction value, they may remain subject to disclosure under the applicable financial reporting standards and the Companies Act.
Finance teams should therefore avoid using the RPT Form calculation as a substitute for the related-party disclosures required in the financial statements. Auditors may also need to assess whether the company’s related-party register is complete and whether payments have been classified consistently across the tax return, accounting records and financial statements.
Practical issues
- Updating related-party registers: Existing registers may focus mainly on subsidiaries, parent entities and fellow group companies. Companies should verify whether relevant directors and shareholders have also been identified.
- Determining whether an individual is related: The assessment will depend on the statutory ownership and control criteria. Judgement may be required where ownership is indirect, shared among family members or exercised through intermediary entities.
- Separating directors’ fees from other remuneration: Accounting systems may record directors’ fees, salaries, bonuses, consultancy charges and benefits within the same expense category. These amounts may need to be analysed separately for RPT Form purposes.
- Reconciling different reporting requirements: The scope of related-party transactions for tax reporting may not be identical to the scope used for financial statement disclosure, transfer pricing documentation or internal group reporting.
- Reviewing threshold calculations: Companies close to the RPT Form reporting threshold should recalculate their transaction values after excluding directors’ fees and retain supporting reconciliations.
- Maintaining evidence: Businesses should preserve contracts, board resolutions, invoices, payment records and pricing support for transactions involving related directors or shareholders.
Actions plan
Companies should review their related-party identification procedures before completing their next corporate income tax filing. Particular attention should be given to transactions with directors, shareholders and other individuals who may meet the statutory related-party definition.
Tax and finance teams should also ensure that directors’ fees are separately identifiable in the general ledger and excluded from the RPT Form calculation without inadvertently excluding other payments that remain reportable.
Where significant transactions have been entered into with related individuals, businesses should assess whether the terms are commercially supportable and whether transfer pricing documentation or other evidence is required to demonstrate compliance with the arm’s length principle.
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Source: IRAS 21 July 2026.