The table below reflects the indicative margin for related party loans published by IRAS that should be added to the base reference rates (i.e., IBORs/ RFRs) for the years 2020 to 2025

When managing related party loans under Singapore's regulatory framework, there are several critical points to keep in mind:

1. Loan Thresholds Are Based on Committed Amounts

The loan threshold for determining compliance is calculated based on the total amount committed, not the amount utilized. This distinction ensures clarity and consistency when applying the indicative margin guidelines.

2. Currency Considerations

The indicative margin applies to both Singapore-dollar denominated and foreign currency denominated loans. For loans in foreign currencies, the prevailing exchange rate at the time the loan is obtained or provided should be used to convert the amount into SGD to determine the applicable threshold.

3. Indicative Margins Are Not Mandatory

While IRAS provides indicative margins to simplify compliance, using them is optional. Businesses can alternatively conduct a detailed transfer pricing analysis to determine arm’s length interest rates that better reflect specific circumstances.

4. Transition Legacy IBOR Loans to RFRs

For legacy related party loans tied to Interbank Offered Rates (IBORs), it is advisable to renegotiate loan terms to adopt Risk-Free Rates (RFRs) as the base rate. This transition ensures alignment with global financial reforms and IRAS guidelines.

5. Application to domestic loans

From 1 January 2025 the indicative margin can be applied to all domestic loans entered by Singapore taxpayers.

Example 1 (Threshold based on loan committed)

Company A obtained a facility of SGD25 million from a related party. Company A has utilised SGD10 million of the loan. Company A cannot apply indicative margin although the loan amount utilised is less than SGD15 million.

Example 2 (Foreign currency denominated loans)

Company B provided a loan to a related party amounting to USD14 million. The exchange rate at the time the loan was provided was USD1: SGD1.32. The loan amount in SGD equivalent is approximately SGD18.6 million. Given that the loan amount has exceeded the SGD15 million threshold, Company B cannot apply the indicative margin.

[1] Information on SIBOR extracted from the Association of Banks in Singapore (“ABS”), https://www.abs.org.sg/benchmark-rates/rates-sibor#

[1] Information on SORA extracted from Monetary Authority of Singapore,

https://eservices.mas.gov.sg/Statistics/dir/DomesticInterestRates.aspx 

Example 3 (Related party domestic loans)

Company C entered into a loan arrangement with its subsidiary, Company Cc on 15 January 2025. Both the lender and borrower are Singapore taxpayers and are not involved in the business of borrowing or lending. The loan facility extended by Company C to Company CC is S$20 million. For this loan arrangement, Company C can apply the IRAS indicative margin.