International Compliance Assurance Programme (ICAP)

The ICAP is a voluntary risk assessment and assurance programme to facilitate co-operative multilateral engagements between multinational enterprises (MNEs) and tax administrations.

Developed by the Organisation for Economic Co-operation and Development (OECD), the ICAP is designed to be an efficient, effective and coordinated approach to provide MNEs with increased tax certainty with respect to certain of their activities and transactions. 

IRAS is participating in the ICAP from 2021, as part of our commitment to provide tax certainty to MNEs.

For MNEs operating in Singapore, the ICAP serves as an additional tool to manage potential cross-border tax disputes. Under the ICAP, IRAS will work together with MNEs and other participating tax administrations to reach a mutual understanding of the tax risk present in certain activities and transactions carried out by an MNE. In the spirit of co-operative compliance, the ICAP is designed to provide a faster route to multilateral tax certainty, and reduce the number of cases that result in disputes.

More information on the ICAP can be found on OECD's website.

How to Participate in the ICAP

An MNE may indicate 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 may be approached by its UPE tax administration to discuss its possible participation in the programme.

The MNE’s suitability for the ICAP will be considered on a case-by-case basis. The MNE may propose the participating tax administrations it wishes to be involved in its ICAP risk assessment, which will be subject to the participating tax administrations’ agreement.

Benefits of the ICAP

The key benefits of the ICAP include:

  • Improved tax certainty for MNEs and tax administrations

  • More effective dispute resolution by preventing unnecessary disputes

  • Better and more standardised information such as Country-by-Country Reports for transfer pricing risk assessment

  • Better use of resources for MNEs and tax administrations 

  • Advances in international collaboration

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.

If you have enquiries, you may email us at ct_transfer_pricing@iras.gov.sg.

 

  • Does IRAS’ participation in the ICAP mean MNEs with a presence in Singapore must participate in the ICAP?

    No. As the ICAP is a voluntary programme, IRAS’ participation does not mean that MNEs with a presence in Singapore will automatically participate in the ICAP.

    An MNE may indicate its interest in participating in the ICAP to the UPE tax administration, or may be approached by its UPE tax administration to discuss its possible participation in the programme. 

  • How will taxpayers know which jurisdictions are participating in the ICAP?

    You may refer to OECD's website for the list of tax jurisdictions that are participating in the ICAP.

  • What is the expected duration of the ICAP?

    There are 4 stages in the ICAP – (1) Pre-entry; (2) Scoping; (3) Risk assessment and issue resolution; and (4) Outcomes. You may refer to the ICAP 2.0 Handbook in OECD's website, which outlines the expected duration for each stage under the ICAP.

  • What is the outcome from participating in the ICAP?

    The ICAP does not provide an MNE with the type of legal certainty that may be obtained through an APA. Rather, it aims to provide greater comfort and assurance through outcome letters from participating tax administrations.

    At the end of the ICAP risk assessment, each tax administration that has participated in the risk assessment of the MNE will provide the MNE with an outcome letter. Where the tax administration has assessed that the transaction/ risk area covered under the ICAP risk assessment is low-risk, the outcome letter will include an assurance provided by the relevant tax administration that it does not anticipate that its compliance resources will be dedicated to a further review of that covered risk for a defined period.

  • What is the expectation of an MNE’s commitment under the ICAP? Can the MNE withdraw from the ICAP mid-way through the programme?

    An MNE that decides to participate in the ICAP is expected to provide the information and documentation packages prescribed in Chapter 6 of the ICAP 2.0 Handbook.

    There are 4 stages in the ICAP – (1) Pre-entry; (2) Scoping; (3) Risk assessment and issue resolution; and (4) Outcomes.

    In line with the voluntary nature of the ICAP, at the end of the pre-entry stage, the MNE will be asked whether it wishes to proceed to the scoping stage with the covered tax administrations that have indicated a willingness to participate in the MNE’s ICAP risk assessment. At the end of the scoping stage, the MNE will also be asked whether it wishes to proceed to the risk assessment stage with the finalised scope of transactions or risk areas and terms of its ICAP risk assessment. If the MNE wishes to withdraw from the ICAP, it may do so at either of these 2 stages.