IRAS raised the indicative margin for related party loans in 2026 to +180 bps, while maintaining documentation and reporting rules to ensure arm’s length compliance.
The Inland Revenue Authority of Singapore (IRAS) has updated its Transfer Pricing guidance for 2026 on 2 January 2026, including the indicative margin for related party loans.
For the year 2026, the indicative margin applicable to Risk-Free Rates (RFRs) as the base reference for related party loans of up to SGD 15 million is set at +180 basis points (1.80%), up from +170 bps (1.70%) in 2025.
The SGD 15 million threshold does not apply to related party domestic loans entered into on or after 1 January 2025, where neither party is in the business of borrowing and lending. In such cases, the indicative margin may be used regardless of loan value. IRAS also clarified that Section 34D transfer pricing adjustments will not be applied to these domestic loans, simplifying compliance for taxpayers.
The indicative margin is optional and provides an alternative to conducting a detailed transfer pricing analysis to determine arm’s length interest rates.
IRAS emphasises that all transactions between related entities must follow the arm’s length principle, with contemporaneous documentation required to demonstrate that pricing aligns with independent market rates, particularly for businesses with gross revenue exceeding SGD 10 million. The authority enforces these rules through transfer pricing audits and may impose a 5% surcharge on adjustments made to understated profits.
To further support compliance and avoid double taxation, IRAS provides frameworks such as Advance Pricing Arrangements (APAs) and Mutual Agreement Procedures (MAPs), as well as indicative margins for routine related party loans and support services. Detailed reporting is required for significant related party transactions to ensure profits are taxed where the economic activity occurs.
