The Inland Revenue Authority of Singapore clarified the scope of the “cost plus mark-up” basis of assessment for service companies, and provided rules for companies transitioning from the cost plus mark-up to the “normal trading company” basis of assessment.
The tax authority’s position is that the cost plus mark-up basis is strictly for service companies providing routine support services (as listed in an annex to the transfer pricing guidelines) to related parties only. When the cost plus mark-up basis is adopted, the income is computed based on a 5% mark-up of total expenditures without any further adjustments.
Accordingly, certain companies must transition to the normal trading company basis rules, effective for year of assessment 2019, including:
Read a March 2018 report [PDF 634 KB] prepared by the KPMG member firm in Singapore
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