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Singapore: Guidance on deductibility of payments for related-party services

Treatment as fully deductible service fees, rather than cost allocations, even when services are charged at cost or without a markup

july 20, 2026

The Inland Revenue Authority of Singapore (IRAS) issued guidance on the deductibility of payments for related-party services.

  • The guidance clarifies that payments made by a Singapore service recipient to a related foreign service provider may be treated as fully deductible service fees, rather than cost allocations, even when the services are charged at cost or without a markup.
  • The treatment applies when the payment is incurred for revenue purposes, the arrangement is supported by a service agreement, and the cost-only charging basis is recognized under the foreign jurisdiction's tax rules or administrative practice.
  • The position does not apply to cost contribution, cost sharing, cost pooling, or strict pass-through cost arrangements.


For more information, contact a KPMG tax professional in Singapore:

Audrey Wong | audreywong@kpmg.com.sg

Han Swee Peng | sweepenghan@kpmg.com.sg

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