Our accountants in Singapore can offer more details about the tax treatment of dividends that include taxable and non-taxable shares.
What are the taxable dividends in Singapore?
The next dividends are matter to income tax:
• income from Real Estate Investment Trusts (REITs) derived by individuals through a company in Singapore or from carrying out a trade, commerce or occupation in REITs;
• shares that are foreign-sourced derived by individuals over an enterprise in Singapore;
• dividends funded by co-operatives.
What are the non-taxable dividends in Singapore?
The local tax policies stat that, in most cases, the following types of dividends are not taxable:
• income distribution from Real Estate Investment Trusts, except circulations derived by persons during a business or from the continuation of a trade, occupation or business REITs;
• shares paid on or after 1 Jan 2008 by a Singapore resident business under the one-tier company tax system;
• foreign dividends established in Singapore on or after 1 Jan 2004 by local individuals. If a state resident obtains foreign-sourced shares through a partnership in Singapore, these dividends may be excused from the state tax if definite circumstances are met;
Our accountants in Singapore counsel the future clients that they don’t need to declare taxable dividends in their tax form if the association specifies on the share voucher that they will deliver the dividend info to IRAS. In all other cases, individuals are expected to state all of their taxable dividends when they fill in the profits tax return under the “Other Income” category.
Grouping of shares
As our accountant in Singapore reminds investors, non-income producing shares, local and foreign include:
• shares that are considered as non-income producing if they have not generated any dividend income since the date of purchase;
• costs that are not deductible as the expenses earnt on the shares do not produce dividend income chargeable in Singapore.
Shares that generate tax-free dividend income (for example, one-tier and foreign-sourced dividend income submitted to Singapore in the year and excused from tax) have deductible expenses.
A corporation that takes up a loan to finance the acquisition of 10,000 shares in a certain Ltd will have a deduction of the interest expense acquired on the loan, against the dividend income from the said number of shares in the given Ltd.
Additional information about dividend taxation in Singapore
- the audited accounts of the foreign company paying the dividends; in some cases, the consolidated accounts of the foreign company can also be accepted.
- alternative documents such as a certification from the bank or a confirmation letter from the foreign company that the foreign tax has been paid.
- 0% on dividends: dividends paid by resident companies are exempted in the hands of the recipient.
- 17% corporate tax: this is the standard corporate income tax rate in Singapore; for the assessment year 2019, 75% of the first 10,000 SGD of the regular taxable income and 50% of the next 290,000 SGD are tax exempt.
- 7% GST: the goods and services tax has a standard 7% value with a 0% rate for international services as well as exports of goods.
Please contact our accounting firm in Singapore for tax advice and other financial services.