Tax

The Inland Revenue Authority of Singapore (“IRAS”) has regularly been publishing updates on tax considerations related to the Covid-19 measures. Recently, the IRAS had published some which are specifically related to Transfer Pricing. Many taxpayers have been affected by the ongoing pandemic in terms of their business operations or revenues/profitability and how would such impact the interpretation of current or past data in regards to the Transfer Pricing Documentation for past years and or for Financial Year 2020, the appropriate consideration of testing of the related party transaction and the impact on Advanced Pricing Agreement etc.

The COVID-19 pandemic which was first reported in China in the latter half of December 2019 has now become a constantly evolving global health crisis and is creating several complex challenges for individuals and businesses around the world. As the world governments strive to take unprecedented actions and measures to prevent the spread of the virus, companies of all scale (whether large, medium or small) are facing an uphill challenge to ensure a smooth functioning of their daily business operations and maintain healthy or at least, a break-even profitability in order to recover their fixed costs.
In such challenging times and changing business environments, businesses are likely to face key tax including Transfer Pricing challenges. Accordingly, it becomes imperative for companies to develop effective and defensible strategies to protect their employees and ensure the stability of their business operations during this crisis.

In the wake of the COVID-19 outbreak, the Singapore Government has implemented various measures to assist the enterprises in Singapore as well as providing for individuals impacted in the following budgets:

Deputy Prime Minister Heng Swee Keat has today on the 26th March 2020, in addition to the Unity Budget presented on 18 February 2020, announced an additional set of measures known as Singapore’s Resilience Budget. This supplementary budget is valued at S$48.4 billion. It is intended as a bulwark and provides support measures to taxpayers and citizens against the brutal impact from the global coronavirus outbreak. To fund some of these measures, the government has obtained the President’s in-principle support to draw up to S$17 billion from the country’s past reserves.

With the omnipresence of digital services and platforms, there is a trend of businesses and consumers who are increasingly procuring services from overseas service providers.