Question

Please discuss whether you agree with the following statement and provide supporting reasons:

"Transfer pricing issues will never be relevant to a transaction between two related Singapore entities."

Answer 1

Only if the combined value of the transaction surpasses INR 200 million, it will qualify for transfer pricing. In such expenditures, a deduction has to be asserted during the estimation of profits for a business or profession. Else, it has to be related to businesses qualified for profit-linked tax incentives (for example infrastructure facilities, SEZ units, etc.) as specified in the 1961 Income Tax Act. Transfer Pricing in Singapore entities transfer pricing schemes is applicable in International business transactions only. But, it does not mean that it could not be applied to Domestic transactions. Transfer pricing is also applicable in Domestic transactions where the value of such ‘specifies transactions’ crosses INR 20 crores and it may include; • The scenario where transactions have taken place between two business entities carried on by the same taxpayer and such consideration does not correspond the market value of the goods in transit. • Expenditures in respect to any entity which has a substantial interest in the business of the taxpayer. It could be individual assessee, shareholder or even a partner in that business