The Comptroller may make adjustments to the income of the Singapore taxpayer if the arm’s length principle has not been followed. In other words, the IRAS, based on the audit of the taxpayer, may make an adjustment to the income of the taxpayer by any of the following ways:
- increase the amount of the income for the year of assessment;
- reduce the amount of the deduction that may be allowed for the year of assessment
- reduce the amount of the loss for the year of assessment.
A surcharge equal to 5% of the amount of the increase or reduction (as the case may be) shall be applied by the Comptroller.