ENGAGEMENT LETTER FOR TRANSFER PRICING SERVICES

HTJ.TAX

Scope of Services and Deliverables

We will assist the Company to prepare a transfer pricing documentation on the covered transactions under review that will be compliant with the requirements under the Singapore Transfer Pricing rules. US Transfer Pricing Rules and the Organization for Economic Cooperation and Development Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations ("the OECD Guidelines"). Any additional assignments or projects to be carried out beyond the scope of this engagement will be separately documented and agreed with you in writing. In this regard, advisory services on issues other than transfer pricing would fall outside the scope of this engagement.

The transfer pricing services for this engagement will only cover the intercompany transactions. During the engagement, we may identify additional transactions that ore not covered in the scope as stipulated in this engagement letter. In that case, we will notify your company immediately to discuss any potential changes in the scope of this engagement. Any changes must be agreed in writing by both parties.

We will document your company's transfer pricing in a reasonable manner and in accordance with the arm's length principle with respect to the intercompany transactions under review. If the Covered Transaction cannot be reasonably documented, we will notify your company of the issues and discuss any potential change to the scope of this engagement. Any changes must be agreed in writing by both parties.

In completing our work, we will rely on the integrity of the information made available to us and prepare our report on such basis. In addition, the timing of services and deliverables outlined in the previous section is dependent on the responsiveness and availability of information from the personnel of the Company and its affiliated companies. Unanticipated delays in receipt of information or responses to the questions may delay the estimated project timeline

A. MASTER FILE

 The Master File will include:

 Structure and group ownership chart also country or jurisdiction of each of group member.

1. Business activities performed by group.

Ill. The Intangible assets owned by the group.

1. Financial activities and financing in the group.
2. The consolidated financial statements of the holding entity and tax policy information of related party transaction.

 LOCAL FILE

 Stage I - Functional Analysis

 In this part. we will conduct a review of the functions performed, risks assumed, and assets employed by the Company and related parties. This analysis will form the factual and economic basis for the selection of comparable companies for benchmarking purpose.

We will review the operations of the relevant related entities for the purpose of preparing a function and risk analysis of the transfer pricing report. The review will begin by conducting interviews with Management and the relevant personnel of the Company. Based on the functional analysis, we will review relevant management and financial data, relevant   to   the   covered transactions   under review which include any existing inter­company agreements, financial information, and pricing policies.  As part of this review, we will request and examine information pertaining to the current agreement and pricing arrangements with unrelated parties that may be comparable to the covered transactions under review.  Having understood the covered transactions under review as well as the overall business operation of the group allows us to establish the basis in conducting economic analysis in the ensuing stage. In addition, this step allows us to analyze the financial data of the Company.

Stage II - Economic Analysis and Application of Arm 's Length Principle

 The objective of the economic analysis is to compare the profit position of the tested party with those of uncontrolled comparable companies using appropriate transfer pricing method(s). The economic analysis will include an examination of internal, if any, and external comparable uncontrolled data. This analysis will require the selection of appropriate transfer pricing methodology and identification of third-party companies facing comparable risks, undertaking comparable functions, and engaging in comparable transactions. The financial and operating information gathered from the Company and the selected comparable will be compiled and analyzed to determine the arm's-length nature for the covered transactions under review.  For the benchmarking analyses, we will rely upon financial data provided by the database and will not verify the accuracy of the data with independent sources.

Deliverable: We will document our analysis and conclusions in a transfer pricing report wherein the findings for the covered transactions under review will be provided. The transfer pricing documentation will likely contain the following sections:

• Introduction and overview of the transfer pricing
• Company business activities and
• Industry analysis (this section will be prepared by us with your company’s assistance).
• Overview of intercompany transactions under review and independent transactions.
• Functional and risk
• Selection of
• Comparable
• Evaluation results of controlled transactions.
• A summary of the application of the arm's length principle; and
• Financial and non-financial event/facts that influenced price or profit determination.
• Overview of regulatory framework (US, EU, and/or OECD guidelines).

The draft report will be provided to your company for review and comment, and we will incorporate your company feedback into the final report.

Timeline

We expect to complete the project within the agreed time period after receiving the relevant business information, which is to be provided by your company.

These timeline estimates are subject to the assumptions made in this engagement letter and your company's cooperation in providing any necessary information or access to relevant personnel. A final work plan will be concluded between your company and us during the project's kick-off phase.

Limitations on Our Scope & Out-of-Scope Services

 The scope of our work will be restricted by the information made available to us by your company, and we will not corroborate the information received. In addition, while we will make its best efforts to reflect reasonable interpretation of the transfer pricing laws, we cannot guarantee that the analyses will be regarded as binding by the tax authorities. Consequently, the results of the analyses should not be taken as assurance that every authority will agree with our conclusions or that your company will prevail against a potential adjustment.

Additionally, the timing of our services agreed upon is depending on the provision of information from your company personnel. Unanticipated delays in the provision of information or answers to questions may alter any estimated project timeline.

The transfer pricing service does NOT include initiation of administrative remedy procedures such as re-investigation, tax audit assistance, appeal, administrative litigation, and the supplementary explanations as required by the relevant tax authorities.

Liaison with External Auditors

 In the event that your external auditors request access to our working papers or the reports we have prepared for you, we would request that they acknowledge their own independent responsibilities as statutory auditors and that we bear no responsibility to them. Consequently, the responsibility that comes from the use of our work is entirely borne by them.

Our Fee

Our fees are based on the number and seniority of staff required, the degree of skill and responsibility involved, the resources required to complete the engagement and the fee rates for the appropriate personnel. Our estimated fees are, therefore, based on expected time to be incurred and standard billing rates. We do not issue refunds.

Please also note that our above fee does not include any out-of-pocket expenses, which will be charged on a reimbursement basis.

 

Very truly yours,

HTJ.TAX

___________________

Derren Joseph

 

 

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