From stated yield to the yield you keep
A private credit commitment measured on the capital you set aside: the drawdown ramp, cash drag, credit losses, fund leverage, the fee base and the tax on interest under the system that applies to you.
By Eldar Edmond Grady, CEO, PPLI.com. Research checked 27 September 2026.
Singapore law as at 27 September 2026, Year of Assessment 2026, for an individual resident in Singapore who holds the portfolio or policy personally. Home-country rates are the 2026 figures stated on the page.
PPLI.com is a research publisher, not an insurer, broker or financial adviser, and is not licensed by the Monetary Authority of Singapore. Nothing here is an offer of insurance. To buy a policy, deal with an insurer or adviser licensed or exempted by MAS and check it on the MAS Financial Institutions Directory.
Committed is not invested, and taxable is not received
A credit fund quotes the yield on the money it has lent. You are paid on the money you committed, and the undrawn part earns only a cash rate while it waits.
Where interest is capitalised rather than paid, the model taxes it in the year it accrues, so tax can arrive before cash. For a resident taxed only in Singapore the tax is 0; foreign-sourced interest received by a resident individual is exempt.
For a US person the interest is ordinary income at 40.8% every year. Under the mainland China preset it is 20%. No reduced rate applies for holding period in either.
A 10% coupon, fully invested, no losses and no fees
Hypothetical. S$10,000,000 lent at 10% for a year.
Singapore only 0% kept S$1,000,000 10.00%
US person 40.8% kept S$592,000 5.92%
UK-connected, after return 45% kept S$550,000 5.50%
Mainland China domicile 20% kept S$800,000 8.00%Fees, the ramp, losses and leverage then come off this. The breakdown in the instrument shows each deduction as a yield on committed capital, so they can be compared directly.
What the instrument applies
Deployment
Capital is drawn in a straight line over the years to full investment; the undrawn balance earns the cash rate.
Losses and leverage
Default rate times one minus recovery is the loss that reaches the yield. Fund debt multiplies returns and losses, and its cost sits in between.
Tax
Interest taxed at your rate on interest in the year it accrues. For the UK-return preset one set of annual rates is used, the rates after return.
Common questions
How is payment-in-kind interest taxed here?
The model taxes capitalised interest in the year it accrues, so tax can arrive before cash. When tax really falls due depends on the fund structure and the tax system; check it in the documents.
Instruments and related reading
Hedge Fund X-RayA fund whose return is total return rather than couponOpen →Tax drag calculatorThe credit sleeve as one row of a portfolioOpen →Alternative investment intelligenceHedge funds and private credit togetherOpen →Wealth simulatorThe allocation this commitment sits insideOpen →PPLI.com is a research publisher, not an insurer, broker or financial adviser, and is not licensed by the Monetary Authority of Singapore. This page is general information about how tax systems treat a portfolio and a life insurance policy. It is not an offer of insurance and not advice on any product. A policy from an insurer not licensed in Singapore is outside the Policy Owners' Protection Scheme and outside Singapore statutory nominations.
The authorities this page relies on
Income Tax Act 1947 s 13(7A), s 13(1)(za) and s 13(1)(zd)
Foreign-sourced income received in Singapore by a resident individual is exempt, except income received through a partnership in Singapore (s 13(7A)(b)). Dividends paid by Singapore-resident companies under the one-tier system are exempt (s 13(1)(za)), as is interest on deposits with approved banks (s 13(1)(zd)). sso.agc.gov.sg, ITA 1947 s 13
Rev. Proc. 2025-32 and 26 USC 1411
For 2026 the 37% rate applies above US$640,600 of taxable income for a single filer and the 20% rate on long-term gains and qualified dividends above US$545,500. The 3.8% net investment income tax (s 1411) does not apply to nonresident aliens, so it does apply to US citizens abroad. Top combined rates: 40.8% and 23.8%. irs.gov, Rev. Proc. 2025-32
gov.uk, tax rates on property, savings and dividend income
For 2026/27: savings income at 20, 40 or 45%, dividends at 10.75, 35.75 or 39.35% from 6 April 2026. Savings rates rise to 22, 42 and 47% from 6 April 2027. gov.uk, rate changes
PRC Individual Income Tax Law, arts 1, 3 and 4
A person domiciled in China, meaning habitually resident there because of household registration, family or economic ties, is a resident taxed on worldwide income (art 1). Interest, dividends and property-transfer income are taxed at 20% (art 3). Insurance compensation is exempt (art 4). chinatax.gov.cn, IIT Law
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