Singapore: Deductibility of common interest expenses | KPMG Global
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Singapore: Determining the tax deductibility of common interest expenses

Singapore: Deductibility of common interest expenses

The Inland Revenue Authority of Singapore issued guidance to clarify application of the "total asset method" of attributing common interest expenses (including borrowing costs that are akin to interest) to income-producing and non-income-producing assets.


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A provision (section 14(1)(a)) of Singapore’s tax law provides that for an interest expense to be tax deductible, the interest must be payable on capital employed in acquiring the income. In other words, there must be a direct link between the interest expense incurred on the use of loans and the income earned.

The tax authority’s guidance (e-Tax Guide, 16 December 2016) sets out the rationale of using the total asset method, the underlying assumptions, and how the method is to be applied. 


Read a February 2017 report [PDF 346 KB] prepared by the KPMG member firm in Singapore

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