Singapore: Updated e-Tax Guide on tax treatment of front-end fees

Inland Revenue Authority of Singapore updated its e-Tax Guide on deductibility of front-end fees

Updated e-Tax Guide on tax treatment of front-end fees

The Inland Revenue Authority of Singapore (IRAS) updated its e-Tax Guide on tax deduction for borrowing costs other than interest expenses to provide more detailed guidance on the deductibility of front-end fees.


Under Section 14(1)(a)(ii) of the Income Tax Act 1947, borrowing costs (other than interest expenses), which are incurred as a substitute for interest expenses or to reduce interest costs, are deductible if they are prescribed under the stipulated regulations.

To qualify for deduction under Section 14(1)(a), the expense must be payable “upon any money borrowed” and the Comptroller of Income Tax must be satisfied that such sum is payable on “capital employed in acquiring the income.” In 2014, the list of prescribed borrowing costs was expanded to include amendment fees, front-end fees, and back-end fees. 

The different types of loans for which front-end fees may be incurred include the following:

  • Bilateral loans
  • Club loans
  • Syndicated loans

KPMG observation

This update follows a series of clarifications made between the IRAS and various banks on the commercially practicable documentation available for taxpayers to substantiate a tax deduction claim on front-end fees.

Taxpayers who have undertaken loans as a borrower under which they incur front-end fees need to revisit the clauses set out in their relevant loan document(s) and assess their respective features to validly identify the loan type for determination of the appropriate tax treatment on any front-end fees incurred.

Read a November 2023 report [PDF 352 KB] prepared by the KPMG member firm in Singapore


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