Shareholders have access to the profits of a Singapore company in the form of dividends. These may be paid in cash or in kind and their taxation is regulated by the Inland Revenue Authority.
Our accountants in Singapore have prepared a guide on dividends in Singapore so that you can better understand the taxation principles in this case.
Table of Contents
Dividends from Singapore companies
Just like any other income, dividends represent amounts of money that are derived from the rights of the shareholders in a company. These are usually paid in cash or in kind and their provenience is corporate stocks.
When it comes to the taxes that need to be paid for these incomes, individuals are and companies are taxed on the profits generated in Singapore, but also on the income obtained outside the city-state and for which financial statements have been filed with the Inland Revenue Authority.
| Quick Facts | |
|---|---|
| Applicable legislation | – Income Tax Act, – Company Law. |
Taxation rules applicable to dividend payments | Taxation occurs at the recipient level. |
Payment forms | Dividends can be paid in cash or kind. |
| Types of dividends in Singapore | – taxabe, – non-taxable. |
| Taxable dividends | Dividends paid by: – co-operatives, – real estate investment trusts when derived from Singapore-registered partnerships, – foreign companies obtained by individuals in partnerships. |
| Non-taxable dividends | Dividend payments made by Singapore companies. |
| Are foreign-sourced dividends taxed in Singapore? (YES/NO) | Yes, but only when received by companies. However, exceptions to these rules apply. |
| Availability of a specific dividend tax in Singapore (YES/NO) | No, there is no specific dividend tax. Where taxable, the income tax applies. |
| Applicable taxable rates | – 17% in the case of companies, – progressive rates (0% to 24%) in the case of individuals. |
| Taxation of dividends in the case of shareholders of private companies in Singapore | Tax exemptions apply under the one-tier corporate tax system. |
| Reporting requirements for individuals | Individuals are required to report payable dividends in the ‘Other Income’ section of their tax returns. |
| Reporting requirements for companies | Companies must report dividend payments in the annual income statement. |
| Possibility to reinvest dividend payments (YES/NO) | Yes. |
| Possibility to deduct dividends (YES/NO) | Yes, dividends may be deducted as business expenses in Singapore. |
| Support if filing tax returns related to dividend payments (YES/NO) | Yes, you can contact our accounting firm in Singapore for assistance in such matters. |
| Definition of dividends according to the MAS | Profits received from the share ownership of a company. |
Possibility to issue interim dividends (YES/NO) | Yes, the board of directors can decide to issue such dividends. |
Distribution of dividends in Singapore | Dividends are distributed in accordance with the number of shares in the company. |
| Are dividends sourced through Real Estate Investment Trusts (REITs) taxed in Singapore? (YES/NO) | No, except when they arise from a partnership in Singapore, conducting a business, trade, or profession related to the REIT. |
| How is the value of a dividend calculated? | The value is determined on a share basis. |
| Types of dividends by share | – cash, – stock, – preferred, – special dividends. |
| Is it possible to distribute dividends if a company does not make profits (YES/NO) | No. |
| Must dividend payments be recorded in the company’s balance sheet (YES/NO)? | No, it is not necessary. |
| Are dividend payments covered by double tax treaties? (YES/NO) | Yes. |
| How can dividend tax exemptions be claimed? | By submitting the following information on the tax return: – information about the amount of money received and its nature, – the country in which it arised, – the tax rate paid in the foreign country, – confirmation of paying the respective tax. |
| Applicability of double tax agreements to dividend payments | Under the form of tax credits, reliefs, or exemptions. |
| Is there a limit to the distribution of dividends? (YES/NO) | No, however, the company must consider its profits when distributing them. |
| Payment dates | Dividends can be paid monthly, quarterly, twice a year, or annually. |
| Can holding companies issue dividends? | Yes, they benefit from the same rules applicable to other companies. |
| Documents required when filing the dividend declaration | – dividend register, – the resolution indicating the payment of dividends, – shareholders’ approval, – minutes of the meeting in which the issuance of the dividends was decided. |
The taxation of dividends can be complicated as there are several rules to comply with, which is why if you need support, our accountants in Singapore are at your service.
Taxable dividends in Singapore
Some dividend payments in Singapore are subject to income tax. These include the following:
- those dividends paid by co-operatives;
- income distribution from real estate investment trusts, when the distribution is derived by individuals through a partnership in Singapore;
- dividends paid by a foreign entity, derived by individuals through a partnership in Singapore.
A tax exemption for foreign-sourced income does apply in Singapore for foreign-sourced dividends. This exemption is granted when all three conditions, as described in the Income Tax Act, are met. The experts at our accounting firm in Singapore can describe these situations and determine if you qualify for the exemption.
Creating tax statements, calculating payroll, and filing and paying year-end taxes are just a few of the automatic duties that a payroll agency may perform for your company. Please contact our Singapore payroll company if you require assistance with these employment-related matters. You can also rely on for other accounting services.
We also have an infographic on this topic below:
Non-taxable dividends in Singapore
In general, divined payments made by Singapore resident companies, according to the one-tier corporate tax system, are not taxed (except for co-operatives, as stated above). Singapore imposes no withholding tax on dividend payments made by resident companies. Foreign dividends received by resident individuals in Singapore are also exempt from tax. A clear example of non-taxable dividends includes those dividends received from private resident companies or dividends from resident companies that are listed on the Singapore Stock Exchange.
Companies and individuals in Singapore can declare their dividend income on the tax return (under the “Other income” category). This declaration is not mandatory if the company indicates the fact that they will provide the dividend information to the IRAS.
Our team of accountants in Singapore can help you with additional details about reporting dividend income.
The taxation of dividends obtained from abroad
Natural persons and companies obtaining dividends from foreign-sourced incomes must be declared in Singapore and they will be taxed here. However, when the taxes for the respective dividends were paid in the country they were obtained in, no additional taxeswill be imposed in Singapore on the principle of the avoidance of double taxation. For this purpose, an agreement must be in place.
If you need information on the taxation of dividends and how natural persons and companies are levied in the city-state, our accounting firm in Singapore can offer detailed information. Also, specialized support will be provided on a case-to-case basis.
Profits of Singapore companies from which dividends arise
In order to be able to issue dividends, a Singapore company’s directors must make a proposition to the shareholders. However, it should be noted that these can only be paid from the profits made by the company, therefore before making the decision that dividends can be paid, the shareholders must make sure the business has the profits from which it can issue them. From this point of view, profits will cover:
- only the amounts of money generated by the company alone, even if the business is part of a group (such as is the case of holding companies),
- dividends can also be paid if the total assets of the company are worth less than the capital contribution of the shareholders (however, they are conditioned by the net income of the business),
- dividends can also be paid from the capital appreciation of a company,
- profits can also include amounts of money earned in the past financial year and that have been set aside for the following one.
What should be noted when it comes to the distribution of dividends is that a Singapore company’s Articles of Association can contain specific provisions on the profits from which dividends can be paid. This is why it is best to consult with an accountant in Singapore before the distribution and payment of the dividends are made.
The declaration of dividends in Singapore
As mentioned above, the directors will propose the distribution of dividends to the shareholders and the proposition must come under the form of a declaration. The managers will also recommend a rate at which the dividends will be paid followed by its voting during the Annual General Meeting of the shareholders. If approved, these will be referred to as final dividends. However, it is also possible to pay interim dividends which are issued before the end of the financial year, provided that they can be reflected in the profits of the business.
In Singapore, dividend payments are usually made before the filing of financial statements.
In the case of interim dividend payments, these must be accompanied by the interim financial statements.
Our Singapore accountants can help you prepare and file the financials statements with the Inland Revenue Authority.
The declaration of dividends in Singapore implies the preparation of various accounting documents, among which:
- the dividend register,
- the resolution through which the payment of the dividends were made,
- the approval of the shareholders,
- the minutes of the meeting during which the issuance of the dividends was decided.
Our specialists can offer more information on the details that must accompany the financial declarations related to the issuance of dividends in Singapore.
We also offer audit services. The financial audit is the best choice for reviewing, assessing, and offering management solutions for accounting and financial reporting of transactions and operations. Making sure that the financial activity is thoroughly and accurately recorded in the pertinent financial reports and in accordance with applicable regulations is the primary objective of this kind of service. Such a service is available from our auditors in Singapore.
The following video clarifies the taxation of dividends in Singapore:
Income tax rates applied in Singapore
The following rates are levied on income in Singapore:
- the corporate tax rate which is set at a rate of 17%,
- a 0% rate is applied dividends payments made by Singapore companies to their shareholders,
- dividends obtain abroad and not capitalized in Singapore by individuals and companies will be subject to a 0% rate,
- the taxation of dividends earned abroad and declared in Singapore will be taxed at rates ranging between 0% and 17%.
Contact us for detailed information on taxation in Singapore and for personalized accounting services. You can also rely on us for other services, such as payroll support. The primary area of expertise of a payroll company in Singapore is providing complete administration solutions to international small and medium-sized businesses in the city-state. Regardless of the size or needs of your business, whether you need comprehensive corporate payroll services or just limited processing, we can securely and efficiently manage your payroll, saving you a ton of time and money.