What is the International Compliance Assurance Programme (ICAP)

The International Compliance Assurance Programme (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), it is designed to be an efficient, effective, and co-ordinated approach to provide MNEs with increased tax certainty with respect to certain of their activities and transactions.

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

How to participate in ICAP

IRAS is participating in ICAP from 2021. An MNE may indicate an interest in participating in ICAP to the tax administration in the jurisdiction of its ultimate parent entity (the 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 ICAP will be considered on a case-by-case basis. The MNE may propose for participating tax administrations it wishes to involve in its ICAP risk assessment, which will be subject to the participating tax administrations’ agreement.

Benefits of ICAP

The key benefits of 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; and

  • Advances in international collaboration.

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 to provide tax certainty to MNEs.

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

  • Why is IRAS participating in ICAP?

    IRAS’ participation in ICAP is part of our commitment to provide tax certainty to MNEs.

    For MNEs operating in Singapore, ICAP serves as an additional tool to manage potential cross-border tax disputes. Under 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, ICAP is designed to provide a faster route to multilateral tax certainty, and reduce the number of cases that result in disputes.

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

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

    An MNE may indicate interest in participating in 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 ICAP?

    Please refer to the OECD website for the list of tax jurisdictions that are participating in ICAP.

     

  • What is the expected duration of ICAP?

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

  • What is the outcome from participating in ICAP?

    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 ICAP? Can the MNE withdraw from ICAP mid-way through the programme?

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

    There are four 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 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 two stages.