Statute Details
- Title: Income Tax (Prescribed Interest Rate for Section 93(9)(e)) Rules 2024
- Act Code: ITA1947-S252-2024
- Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act 1947 (power under section 7(1))
- Enacting authority: Minister for Finance
- Maker / signature: TAN CHING YEE, Permanent Secretary, Ministry of Finance
- Date made: 28 March 2024
- Commencement: 1 April 2024
- Legislative instrument number: SL 252/2024
- Status (as provided): Current version as at 27 Mar 2026
- Key provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “3-month compounded SORA”, “business day”, “prescribed methodology”, “SORA”)
- Section 3: Prescribed interest rate for section 93(9)(e) of the Income Tax Act 1947 (1.5 percentage points above 3-month compounded SORA for parts of interest periods falling on or after 1 April 2024)
What Is This Legislation About?
The Income Tax (Prescribed Interest Rate for Section 93(9)(e)) Rules 2024 (“the Rules”) is a targeted subsidiary legislation instrument that sets a specific benchmark interest rate for a particular tax provision in Singapore’s Income Tax Act 1947 (“ITA”). In practical terms, it tells taxpayers and tax administrators how to compute the “prescribed interest rate” used in the operation of section 93(9)(e) of the ITA for relevant interest periods.
Section 93 of the ITA generally deals with interest and certain tax consequences arising from loans and financial arrangements, including circumstances where interest is paid or accrued and where tax treatment depends on whether interest is at arm’s length or otherwise within prescribed parameters. The Rules do not rewrite section 93 itself; instead, they supply the missing numerical element—namely, the prescribed interest rate—by reference to a market-based benchmark: the Singapore Overnight Rate Average (SORA).
The Rules are designed to be precise and operational. They define the benchmark rate (SORA), specify how to compute a “3-month compounded SORA” using a “prescribed methodology” published by the Monetary Authority of Singapore (MAS), and then prescribe a fixed spread (1.5 percentage points) above that compounded benchmark. This structure supports consistency across taxpayers and reduces disputes about how the benchmark should be calculated.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title (“Income Tax (Prescribed Interest Rate for Section 93(9)(e)) Rules 2024”) and states that the Rules come into operation on 1 April 2024. This commencement date matters because section 3 applies the prescribed rate to “any part of any interest period falling on or after 1 April 2024”.
Section 2 (Definitions) is the most technically important part for practitioners. It defines the components needed to compute the benchmark rate used in section 3. The Rules define:
- “SORA” as the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank Singapore dollar cash market in Singapore between 8 a.m. and 6.15 p.m., published by MAS either on its website or in another publicly accessible form if the website is unavailable.
- “business day” as any day other than Saturday, Sunday or public holiday.
- “prescribed methodology” as the methodology set out in MAS’s user guide titled “Compounded Singapore Overnight Rate Average Index (“SORA Index”), Compounded SORA and MAS Floating Rate Notes (“MAS FRN”: A User Guide” dated 16 March 2021.
- “3-month compounded SORA” in a way that depends on which half of the year the relevant interest period falls into.
The definition of “3-month compounded SORA” is deliberately granular. It provides two alternative computation windows:
- Window A: If the relevant period (or part of the period) falls within the 6-month period beginning on 1 April of a calendar year, the “3-month compounded SORA” is the compounded average of SORA values for a 3-month period computed by MAS using the prescribed methodology, and published on a specified publication date in that calendar year.
- Window B: If the relevant period (or part of the period) falls within the 6-month period beginning on 1 October of a calendar year, the same concept applies, but using the 1 October-based window and a corresponding publication date in that calendar year.
In each window, the Rules specify the publication date by reference to calendar dates and business-day adjustments. For the 1 April window, the publication is on either 1 March (if it is a business day) or otherwise the last business day in February. For the 1 October window, the publication is on either 1 September (if it is a business day) or otherwise the last business day in August. This approach ensures that the compounded benchmark is available in advance for the relevant interest period and avoids uncertainty around late publication.
Section 3 (Prescribed interest rate for section 93(9)(e) of the Act) is the operative provision. It states that for the purposes of section 93(9)(e) of the ITA, the prescribed interest rate for any part of any interest period falling on or after 1 April 2024 is:
1.5 percentage points above the 3-month compounded SORA.
From a practitioner’s perspective, the key points are:
- Temporal scope: the prescribed rate applies only to the portion of an interest period that falls on or after 1 April 2024. If an interest period straddles that date, the computation may need to be split by time (depending on how section 93(9)(e) is applied in the underlying tax context).
- Benchmark selection: the rate is not simply “SORA” (overnight) but specifically 3-month compounded SORA, which is a compounded average over a 3-month period computed by MAS.
- Fixed spread: the Rules add a constant 1.5 percentage-point uplift to the compounded benchmark. This spread is the policy choice embedded in the Rules and will affect the tax outcome where the prescribed rate is used.
How Is This Legislation Structured?
The Rules are structured as a short, three-section instrument:
- Section 1 provides the citation and commencement date.
- Section 2 contains definitions, including the technical definitions needed to compute the benchmark rate (SORA, business day, prescribed methodology, and 3-month compounded SORA with publication-date mechanics).
- Section 3 sets the prescribed interest rate formula for section 93(9)(e) of the ITA, including the effective date threshold (on or after 1 April 2024).
Notably, the Rules do not contain enforcement provisions, penalties, or procedural requirements. Their function is purely to supply the prescribed rate and the computational framework for the benchmark.
Who Does This Legislation Apply To?
The Rules apply to taxpayers and practitioners who must compute or apply the “prescribed interest rate” under section 93(9)(e) of the Income Tax Act 1947. While the Rules themselves do not list categories of persons, the reference to the ITA provision indicates that the relevant obligations arise in the context of interest computations for tax purposes—typically involving loans, financing arrangements, or other transactions where section 93 governs the tax treatment of interest.
In practice, the Rules will be relevant to corporate taxpayers, financial institutions, and any parties whose tax positions depend on the prescribed interest rate for the relevant interest period. Because the prescribed rate is benchmarked to MAS’s published compounded SORA, the Rules also indirectly affect how taxpayers document and substantiate interest calculations, especially where systems must incorporate the correct benchmark publication dates and the correct “3-month compounded SORA” window.
Why Is This Legislation Important?
Although the Rules are short, they are important because they determine a concrete numerical input into a tax provision. In tax disputes, the difference between using the correct benchmark (3-month compounded SORA) and an incorrect one (for example, using a simple SORA rate, using a wrong compounding window, or using an incorrect publication date) can materially affect the computed interest amount and therefore the tax outcome.
The Rules also reflect a broader policy approach: using a transparent, market-based benchmark (SORA) and a defined computational methodology (MAS’s user guide) to reduce subjectivity. The fixed spread of 1.5 percentage points provides predictability, while the publication-date rules and business-day adjustments ensure that taxpayers can reliably obtain the benchmark values in advance.
From an implementation standpoint, practitioners should ensure that internal tax calculation engines and documentation processes are aligned with the Rules’ definitions. In particular, systems should be able to determine which 6-month window applies to each part of an interest period, retrieve the correct MAS-published “3-month compounded SORA” value, and then apply the 1.5 percentage-point uplift. Where interest periods straddle 1 April 2024, careful time-apportionment may be required to apply the prescribed rate only to the relevant portion “falling on or after 1 April 2024”.
Related Legislation
- Income Tax Act 1947 (in particular section 93(9)(e))
- Income Tax Act 1947 (power to make subsidiary legislation under section 7(1))
- MAS benchmark documentation: “Compounded Singapore Overnight Rate Average Index (“SORA Index”), Compounded SORA and MAS Floating Rate Notes (“MAS FRN”): A User Guide” dated 16 March 2021 (referenced as the “prescribed methodology”)
Source Documents
This article provides an overview of the Income Tax (Prescribed Interest Rate for Section 93(9)(e)) Rules 2024 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.