January 8, 2026
Singapore Adopts Simplified Transfer Pricing Approach for Baseline Distribution
Summary
On 19 November 2025, the Inland Revenue Authority of Singapore (IRAS) published the 8th edition of its Transfer Pricing Guidelines, which introduces a simplified and streamlined approach (SSA)—aligned with the OECD “Amount B” framework—for determining arm’s length prices of qualifying baseline marketing and distribution transactions between related parties. The SSA applies to taxpayers that meet prescribed qualifying conditions and may be elected for financial years from 1 January 2026 to 31 December 2028.
Key points
Scope of SSA
The SSA is applicable to qualifying transactions, which include:
Buy-side marketing and distribution transactions where the distributor purchases goods from related parties for wholesale distribution to unrelated parties.
Sales agency and commissionaire transactions where the sales agent or commissionaire contributes to related parties’ wholesale distribution to unrelated parties. Transactions involving non-tangible goods or services, commodities, or activities incidental to qualifying transactions generally do not qualify.
Qualifying Conditions
Taxpayers may elect to apply the SSA if all the following conditions are satisfied:
The transaction qualifies under the scope described above.
The transaction can be reliably priced using a one-sided transfer pricing method with the tested party. IRAS approves the traditional transactional net margin method and the transitional net margin method.
The tested party incurs annual operating expenses (OES) between 3% and 30% of annual net revenues, calculated on a three-year weighted average basis.
Determination of Arm’s Length Return
Paragraphs 19.7–19.17 of the Guidelines set out a two-step approach for determining the return of the tested party under the SSA, including worked examples illustrating the calculations.
Documentation Requirements
Paragraph 19.18 specifies the documentation obligations for taxpayers electing the SSA, including information on the tested party, qualifying transactions, and calculations of the arm’s length return.
Cross-Border Considerations
Not all jurisdictions implementing the OECD SSA recognize its application; adjustments by foreign jurisdictions could result in double taxation.
Where a tax treaty exists, taxpayers may request relief through the mutual agreement procedure (MAP) as outlined in sections 10 and 11 of the TP Guidelines.
A list of covered jurisdictions with effective treaties is available on the IRAS website.
Source
Inland Revenue Authority of Singapore, Transfer Pricing Guidelines, 8th edition (19 November 2025)
https://www.iras.gov.sg/taxes/corporate-income-tax/transfer-pricing-guidelines/
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Disclaimer:
This content is for general informational purposes only and does not constitute professional advice.
Information provided herein is based on publicly available sources as of the publication date and may be subject to change.
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