Companies Servicing Only Related Companies

Key requirements

IRAS can require an arm’s length profit when related-party services are free, charged at cost or priced below independent levels. For specified routine support services, it accepts a 5% cost mark-up where the services fall within the relevant Annex C, are not also offered to unrelated parties and all direct, indirect and operating costs are included. This is a conditional simplification, not a universal service-company tax rate. A different mark-up can be supported by a detailed transfer pricing analysis and should be consistently applied and reviewed. The normal assessment requires examination of the accounts and tax computation; any concessionary assessment basis must separately meet the page’s conditions.