Asia-Pacific Transfer Pricing Handbook

Chapter Thirty-Three

Services Transfer Pricing in Hong Kong and in Singapore

Services Activities Are important for both Hong Kong and Singapore. As a consequence, the Hong Kong and the Singapore tax authorities have addressed services transfer pricing (i.e., the tax treatment for related party services that an enterprise or its associated enterprise undertake). This chapter compares and contrasts services transfer pricing in Hong Kong and Singapore. The reader should note that differences in services transfer pricing rules in Hong Kong and Singapore can impact the enterprise’s choice of headquarters operations, whether for worldwide operations or for operations in the Asia-Pacific region.

SERVICES TRANSFER PRICING IN HONG KONG AND IN SINGAPORE: BASIC COMPARISON

The United States provided the primary impetus for the formation of the Organisation for Economic Co-operation and Development (OECD) following World War II as part of the Marshall Plan. The OECD now has 34 members, and is planning to increase its membership, primarily in Asia and elsewhere. The United States, then, is just one voice in formulating the OECD’s transfer pricing policy. The United States, acting on its own volition, often applies transfer pricing approaches that differ from those of the OECD.

The Inland Revenue Authority of Singapore (IRAS) issued Transfer Pricing Guidelines for Related Party Loans and Related Party Services on February 23, 2009. As background, the IRAS had issued draft supplementary guidelines ...