Related party loans and TP
Our parent lent us money interest-free. Is that a TP issue?
The situation
Related party loans must be at arm's length. IRAS may adjust interest on interest-free or below-market loans.
The law
- Secs 34D and 34F, Income Tax Act 1947: Related party transactions at arm's length; transfer pricing documentation when thresholds are met
What it means for you
Domestic loans between Singapore companies may have simplified rules. Cross-border loans need an arm's length rate. Check IRAS safe harbour options. Interest-free loans can be adjusted to an arm's length rate. Keep loan agreements.
What to do
- List intercompany loans.
- Check domestic vs cross-border.
- Set an arm's length rate.
- Document.
We can do this for youTransfer pricing documentation: SGD 5,000