On the 7 June, IRAS published an announcement that Singapore is to sign The Multilateral Convention (MLI) to implement Tax Treaty related measures to prevent Base Erosion and Profit Shifting (BEPS).
Singapore is amongst the earliest non OECD countries to adopt and consistently implement the OECD BEPS Actions. This signing of the Multilateral Convention is a further commitment towards ensuring that profits should be attributable to the jurisdiction in which the activities occur that give rise to the profits.
It is clear that if a multinational group attributes profit to Singapore at a level that is justifiably challenged by other tax authorities Singapore will not support the group’s defence of the position. Further, Singapore is very focused on substance. For example, Singapore encourages R&D and technology innovation with reliefs and incentives but has recently announced a tightening up of the substance requirements to receive these (details still to be released).
Multinational businesses, with related party transactions both in and out of Singapore, should ensure that they meet the Singapore transfer pricing requirements and, where appropriate, have Transfer Pricing Documentation contemporaneous with their Financial Year End.