Is Dividend Income Taxable in Singapore?Download Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
Before we start, what exactly are dividends? Dividends are profits that you receive from your share of ownership in a company. This can be paid out in the form of cash or in kind, such as receiving dividends in the form of company shares.
Singapore has various regulations for different types of income and treating dividends as taxable or not. In this article, we give examples of non-taxable and taxable dividends, when you should report your dividends and some important things to note regarding dividends.
The following types of dividends are non-taxable, to find a more comprehensive list, refer to IRAS:
- Dividends that are paid to shareholders by a Singapore resident company (excluding co-operatives) under the one-tier corporate tax system
- Foreign dividends received in Singapore by residents through a partnership. If certain conditions are met, these should be exempt from Singapore taxes
- Income distribution from Real Estate Investment Trust (REIT), not including distributions derived for partnerships in Singapore, the carrying of a trade, or a business or profession in REITs
The following types of dividends are taxable, to find a more comprehensive list, refer to IRAS:
- Dividends paid by co-operatives
- Foreign sourced dividends derived by a partnership in Singapore (it is important to note that some of these may qualify for tax exemptions if certain conditions are met)
- Income distribution from Real Estate Investment Trusts derived by partnerships in Singapore, the carrying of a trade, or a business or profession in REITs
When Should I Report Dividends
Similar to income, dividends are declared payable once a year to shareholders. You are not required to declare taxable dividends in your Income Tax Return, in the case where the organisation(s) indicate that they will notify IRAS on the voucher. If this is not the case, you are required to declare all taxable dividends in your income in your Income Tax Return under ‘Other Income’.
Important Information About Dividends
Firstly, the corporate tax in Singapore is 17%, but it is important to note that this is completely different from dividends and that accounting firms in Singapore treat qualifying activities for these taxes differently.
Additionally, companies that pay underlying taxes on foreign dividends are required to produce the following documentations when applying for tax incentives in Singapore, as and when they are needed:
- Audited accounts of foreign companies paying dividends
- Alternative documents such as certifications from financial institutions, a confirmation letter from the foreign company and confirmation of tax payment
When in Doubt, Reach Out!
Sprout Asia wants you to focus on what you do best while we take care of the rest. We offer budget-friendly accounting services from our team of chartered accountants. If you have any questions about our services, feel free to reach out for a complimentary consultation. We’ll respond within 24 hours.