On June 18, Singapore’s Ministry of Finance (MOF) conducted a consultation on the proposed Finance Bill 2025, which includes changes to the rules for determining related parties in partnerships, trusts and registered business trusts. The consultation has since closed, and the MOF is expected to publish the comments and its responses in the fourth quarter of 2025.

Why is this consultation and the proposed changes of relevance to partnerships, trusts and registered business trusts?

Under the existing Transfer Pricing framework in sections 34 D and 34 F of the Singapore ITA, where two persons are related parties, they are:

• required to conduct any intercompany transactions on an independent or arm’s length basis (whether domestic or cross-border), and
• required to prepare and maintain transfer pricing documentation on meeting thresholds, to demonstrate that their transactions are at arm’s length – submitting the TP documentation on request by the IRAS.

Section 2 of the ITA defines related parties as two persons whereby either person controls the other, or they are under the common control of another person, whether directly or indirectly. Further, the current definition of a person includes a company, body of persons and a Hindu joint family – but does not include trusts or partnerships (although for tax purposes, registered business trusts are treated as a company).

Under the proposed amendments to section 34D of the ITA, the definition of “person” will include partnerships, trustee of a trust (when acting as such) and registered business trusts. So, where control over a partnership, trustee of a trust or registered business trust is established, the parties involved in the transaction with such persons are now related parties for TP purposes and their transaction will be subject to the arm’s length principle and Singapore TP Documentation Rules under the ITA.

The rules serve to align the definition of control for registered business trusts, partnerships and trusts, although reference is made to section 7 of the ITA, which outlines how to determine whether a person is treated as a related party to a partnership, trustee of a trust or registered business trust – with details pending.

Section 34 D （9） provides an exclusion for private non-commercial trusts, where related parties are parties to a trust established by an individual for the benefit of its members of their household or family and the transaction is for carrying out of the Trust; it is not a real estate investment trust, unit trust, business trust or any trust established for business or commercial purposes.

Our comments

The proposed amendments will require taxpayers to review whether their structures include partnerships and trustees of trusts, and whether transactions with those persons are related party transactions, making them liable to the arm’s length principal and TP documentation requirements.

While the exemption for private non-commercial trusts is an upside, there is likely to be an increased burden of TP compliance for trusts and partnerships falling under the expanded related party scope.

Staying informed about the proposed legislation is key as failure to comply with arm’s length principle and TP documentation requirements could result in imposition of penalties for non-compliance and surcharges in the event of a TP adjustment.

We look forward to the published comments and responses in fourth quarter 2025. Taxpayers should continue to monitor this development, including details of section 7, which will clarify where control exists between a person and a partnership, trustee of a trust or registered business trust.

For further details, please feel free to reach out to:

Christine Schwarzl
Associate Principal
E-mail: Christine.Schwarzl@TaxiseAsia.com
Tel:+65 8962 8132