The Inland Revenue Authority of Singapore (IRAS) has established the prescribed indicative margin for related party loans at +180 basis points (1.80%) for the 2026 calendar year. This margin, referenced to Risk-Free Rates (RFRs), serves as a critical benchmark for intra-group financing arrangements.
For taxpayers seeking exemption from transfer pricing (TP) documentation requirements under the Income Tax (Transfer Pricing Documentation) Rules 2018, adherence to this margin is mandatory for eligible loans. The exemption applies to two key scenarios: (1) domestic related party loans of any amount initiated from 1 January 2025, where neither entity is engaged in the business of borrowing/lending; and (2) both domestic and cross-border related party loans not exceeding SGD 15 million.
Notably, IRAS has provided significant administrative relief in its recently updated Transfer Pricing Guidelines (8th Edition, 19 November 2025). The authority confirmed it will not make TP adjustments on domestic related party loans entered from 1 January 2025, provided both parties are not financial intermediaries. Consequently, IRAS will also not require TP documentation for such loans, substantially reducing compliance burdens.
Practical Implications:
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The published margin provides certainty for 2026 pricing and documentation planning.
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The clarification on domestic loans removes audit risk for non-financial entities on intercompany loan pricing, provided the +180 bps margin is used.
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Entities must diligently assess whether they qualify as being “in the business of borrowing and lending money,” as this remains a key condition for the concessions.
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For cross-border loans exceeding SGD 15 million, full TP documentation adhering to the arm’s length principle remains obligatory.
Source: IRAS, 2 January 2026