Singapore High Court Upholds IRAS Transfer Pricing Adjustments in Intervac Asia Case
- GTC Global
- 6 days ago
- 1 min read
21 September 2020
Singapore’s High Court considered whether Intervac Asia Pte Ltd had correctly priced related-party distribution transactions, following transfer pricing adjustments made by the Inland Revenue Authority of Singapore (IRAS). IRAS found that Intervac’s resale margins fell below arm’s length benchmarks and applied the resale price method to increase taxable income.
The taxpayer argued that adverse market conditions justified its lower margins.
The Court upheld IRAS’s use of the resale price method, rejecting Intervac’s contention that market factors alone explained the margin shortfall. It found that the taxpayer had failed to demonstrate that its pricing outcomes were consistent with what independent parties would have agreed under comparable circumstances.
The Court emphasised that taxpayers bear the burden of proving that their transfer pricing reflects open-market conditions and that reliable comparables and documentation are essential. It endorsed IRAS’s pragmatic approach to comparability and its preference for traditional transaction methods where appropriate.
The decision reinforces Singapore’s strict approach to transfer pricing compliance, highlighting the importance of robust documentation and alignment between pricing outcomes and value creation in Singapore-based operations.
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