With effect from Year of Assessment (“YA“) 2018, IRAS will be introducing a new Related Party Transaction (“RPT“) reporting requirement for companies which would assist IRAS in better assessing their transfer pricing risks and enforcing the arm’s length requirement.
New Reporting for RPT
Keeping in mind the additional compliance costs, companies are required to complete a new Form for Reporting of RPT (“RPT Form“) only if the value of RPT exceeds S$15 million. A company which meets the reporting criterion would need to state in its Form C whether the value of RPT as disclosed in its accounts exceeds S$15 million and if so, it is required to complete and submit the RPT Form together with its income tax returns for the relevant YA.
The Basis of Determining the Threshold
The value of RPT as disclosed in the accounts is the aggregate of
a. All amounts of RPT as reported in the Income Statement but excluding compensation paid to key management personnel and dividends; and
b. Year-end balances of loans and non-trade amounts due to/ from all related parties.
What are the items to be reported in the RPT Form?
The values of the following categories of RPT are to be reported in the RPT Form:
- Sales and purchases of goods
- Services income and expense
- Royalty and license fee income and expense
- Interest income and expense
- Other income and expense
- Year-end balances of loans and non-trade amounts
In the case of a company with cross-border related party sales or purchases of goods and services, it has to list the top 5 foreign related parties that it transacts with (by the value of sales or purchases respectively) and provide their entity details including entity names, countries, relationship and amounts transacted.
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