Strengthening TP Documentation Requirements, IRAS Releases the e-Tax Guide: Transfer Pricing Guidelines 8th Edition

The Singapore tax authority, the Inland Revenue Authority of Singapore (IRAS), has updated its Transfer Pricing (TP) regulations. The update is outlined in the IRAS e-Tax Guide, Transfer Pricing Guidelines (Eighth Edition), released on 21 November 2025.

In this document, IRAS clarifies several provisions related to TP Documentation, from simplified TP documentation to strict requirements for pass-through costs.

Below are several key updates to the TP Documentation rules:

1. Clarification on Simplified TP Documentation Requirements

To reduce compliance burdens, IRAS provides an option for simplified TP documentation, whereby taxpayers need only submit a declaration confirming that they have prepared qualifying past TP documentation, along with attaching such documentation.

Through this 8th update, IRAS emphasizes that the declaration is mandatory. If a taxpayer uses qualifying past TP documentation but does not submit the declaration, the simplified TP documentation will not be accepted.

To date, IRAS has not specified a standard format for the declaration. IRAS only requires the declaration to at least state that the previous period’s TP documentation meets the criteria to be considered qualifying past TP documentation.

Although simplified, the preparation of simplified TP documentation must still adhere to TP documentation compliance principles, including contemporaneous preparation and a clear indication of the preparation date.

2. Obligation to Review and Update TP Documentation for Loans

IRAS has expanded the annual requirement to review and update TP documentation for loan transactions so that it now applies to all loan tenures, whereas previously it only applied to long-term loans.

This requirement is based on the fact that circumstances between taxpayers and their related parties involved in loan transactions may change over time. These may include changes in economic conditions, collateral value, the borrower’s financial position and creditworthiness, and other factors that can affect interest rates, loan terms, or even cause the loan to resemble equity.

When significant changes occur, taxpayers must assess their impact on the interest rate and loan terms, and document the outcome of this review in the TP documentation, similar to what is required for other related-party transactions.

IRAS also provides practical guidance on the types of significant changes to watch for, including:

• The emergence of refinancing options that are treated as a new loan, thus requiring a fresh transfer pricing determination.
• Changes that commercially trigger price adjustments (repricing). If the taxpayer concludes that repricing is not necessary, they must provide supporting evidence, for example, showing that changes in collateral value do not affect the interest rate.

3. Invoices Do Not Qualify as Written Agreements for Strict Pass-Through Costs

IRAS emphasizes that invoices cannot be considered written agreements or contracts in the context of strict pass-through costs.

Strict pass-through costs allow a service provider within a group to recharge service costs to an affiliated party without a markup. Four conditions must be met for a transaction to qualify as strict pass-through costs. One of these is that the service cost incurred must be a legal or contractual obligation of the affiliated party.

In this context, an invoice issued by a group service provider to an affiliated entity does not constitute a written agreement or contract, as it does not reflect any prior agreement that the affiliated party is legally responsible for the service costs.

In addition, taxpayers must also explain the commercial rationale and the basis for classifying a cost as a strict pass-through cost in their TP documentation.

With this clarification, IRAS further strengthens its expectations regarding TP compliance. As a result, taxpayers, including Permanent Establishments, will have clearer guidance in preparing TP documentation that meets the required standards.

In the future, each related-party transaction must be supported by documentation that is not only complete and accurate but also aligned with the latest requirements to minimize compliance risks. (ASP/KEN)