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 MNE groups 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 MNE groups.
For MNE groups 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 MNE groups 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 group. 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 the OECD's website.
How to Participate in the ICAP Updated!
An MNE group 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.
An MNE group's suitability for the ICAP will be considered on a case-by-case basis. The MNE group can indicate its preferences as to which tax administrations would be participating in its ICAP risk assessment. These preferences will be taken into account by the tax administrations in considering whether they will participate in the MNE group’s ICAP risk assessment, but are not determinative.
The deadlines for submission of an application to participate in the ICAP can be found on the OECD’s website. MNE groups that wish to discuss possible participation in the ICAP should contact the UPE tax administration in advance of the deadline.
Benefits of the ICAP
The key benefits of the ICAP include:
- Improved tax certainty for MNE groups and tax administrations
- More effective dispute resolution by preventing unnecessary disputes
- Better and more standardised use of information such as Country-by-Country Reports for transfer pricing risk assessment
- More efficient use of resources for MNE groups 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 on the ICAP, you may email us at [email protected].
Does IRAS’ participation in the ICAP mean MNE groups with a presence in Singapore must participate in the ICAP?
No. As the ICAP is a voluntary programme, IRAS’ participation does not mean that MNE groups with a presence in Singapore will automatically participate in the ICAP.
An MNE group 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 the OECD's website for the list of tax jurisdictions that are participating in the ICAP.
Which are the tax administrations that may be involved in an MNE group’s ICAP risk assessment?
New! The MNE group can indicate its preferences as to which tax administrations would be participating in its ICAP risk assessment.
After the MNE group submits the initial set of documentation package to the lead tax administration (typically the UPE tax administration), the lead tax administration will provide the documentation package to the tax administrations participating in ICAP and are in jurisdictions where the MNE group has constituent entities. This will be based on the MNE group’s most recently submitted Country-by-Country report. Discussions will be held among these tax administrations to determine the tax administrations that will participate in the MNE group’s ICAP risk assessment.
What is the expected duration of the ICAP?
There are 3 stages in the ICAP – (1) Selection; (2) Risk assessment and issue resolution; and (3) Outcomes. You may refer to the ICAP Handbook on the 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 group with the same 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 group will provide the UPE or the MNE group's local entity 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 group’s commitment under the ICAP? Can the MNE group withdraw from the ICAP mid-way through the programme?
An MNE group that decides to participate in the ICAP is expected to provide the information and documentation packages prescribed in Chapter 6 of the ICAP Handbook.
There are 3 stages in the ICAP – (1) Selection; (2) Risk assessment and issue resolution; and (3) Outcomes.
In line with the voluntary nature of the ICAP, at the end of the selection stage, the MNE group will decide whether it wishes to proceed to the risk assessment stage with the tax administrations that have indicated a willingness to participate in the MNE group’s ICAP risk assessment, and the scope and terms of its ICAP risk assessment as described. If the MNE group does not wish to proceed with the participating tax administrations and the scope and terms as described, the ICAP process ends.