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The International Co-operation and Development Agreement (ICAP) was developed by the Organization for Economic Cooperation and Development (OECD) to be an efficient, effective, and coordinated approach to providing MNE groups with increased tax certainty concerning certain of their activities and transactions.

As part of our commitment to provide tax certainty to MNE firms, IRAS will participate in the ICAP beginning in 2021.

The ICAP is a different instrument for MNE organizations operating in Singapore to resolve cross-border tax issues. Under the ICAP, IRAS will collaborate with MNE groups and other participating tax administrations to develop a shared understanding of the tax risk associated with particular MNE group operations and transactions. The ICAP is intended to provide a speedier path to international tax certainty and to minimize the number of instances that result in disputes in the spirit of cooperative compliance.

How to take part in the ICAP 

An MNE group may express its interest in participating in the ICAP to the tax administration in the jurisdiction of its ultimate parent entity (i.e. the Ultimate Parent Entity (UPE) tax administration), or its UPE tax administration may approach it to discuss its participation in the programme.

The appropriateness of an MNE group for the ICAP will be evaluated on a case-by-case basis. The MNE group can choose which tax administrations it would want to participate in its ICAP risk assessment. Tax administrations will consider these preferences when deciding whether to join in the MNE group’s ICAP risk assessment, but they are not binding.

The deadlines for applying to participate in the ICAP may be found on the OECD’s website. MNE groups interested in participating in the ICAP should contact the UPE tax administration well in advance of the deadline.

Top Benefits of the ICAP

The following are the primary advantages of the ICAP:

• Improved tax certainty for multinational corporations and tax authorities
• By avoiding avoidable disagreements, we may achieve more effective dispute settlement.
• Better and more consistent use of information, such as Country-by-Country Reports, for assessing transfer pricing risk.
• MNE groups and tax authorities can make better use of their resources.
• International Collaboration Advances

The ICAP complements IRAS’ Enhanced Taxpayer Relationship (ETR) Programme, as well as other programmes such as our Advance Pricing Arrangement (APA) and Income Tax Advance Ruling system to provide tax certainty to MNEs.

To learn more about Singapore incorporation, economy, banking, etc., feel free to call/WhatsApp us at +65 90612851 or email us at aceglobalacct@gmail.com. Alternatively, you may leave us a reply using our contact form below.

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