On 3 January 2023, the Inland Revenue Authority of Singapore (IRAS) published updated transfer pricing (TP) guidelines on indicative margin for related-party loans. IRAS publishes the indicative margin at the beginning of each calendar year.
The update includes the indicative margin applicable to Risk-Free Rates (RFRs) as base reference rates for related party loans not exceeding SGD 15 million obtained or provided during the period 1 Jan 2023 to 31 Dec 2023. Indicative margins applicable to Risk-Free Rates (“RFRs”) as base reference rates:
| Related party loan not exceeding S$15 million obtained or provided during the period | Indicative margin |
| 1 Jan 2022 to 31 Dec 2022 | + 180 bps (1.80%) |
| 1 Jan 2023 to 31 Dec 2023 | + 230 bps (2.30%) |
From 2022, IRAS no longer publishes indicative margins for base reference rates that are IBORs. This is in line with the transition of IBORs to RFRs with the decommissioning of LIBOR. If you obtain or provide related party loans from 2022 that reference to IBORs, you are to determine the interest rates following the guidance provided in the IRAS’ Transfer Pricing Guidelines.
The indicative margin is an alternative to performing a detailed transfer pricing analysis to determine armʼs length interest rates and is not mandatory.
