It is commonly known that if a company needs to acquire loan financing from a bank, interest will not be the only cost. It is very likely you will be required to bear withholding tax on the interest costs payable to an offshore financial institution at a rate of 10% or 15%. This needs to be calculated on a gross-up basis (tax on tax), making the effective tax rates 11.11% or 17.65% respectively.
Although withholding tax absorption is not much of a problem for a local transaction, in almost all cases, you will have to bear stamp duties on behalf of the bank anyway.
Apart from the tax costs, it is highly possible that your company will have to pay some types of fees, i.e. management or arrangement fees, which used to be common in the case of a syndicated loan (several banks lending to you at the same time), but now they seem to apply even to a loan with a single lender. However, many loan transactions are accompanied with a guarantee or a standby letter of credit as collateral, and in exchange for which you will be required to pay the fees to the issuing bank.
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