Dividend Tax in Singapore

Updated on June 3,2016
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Dividend Tax in Singapore
Dividends are incomes obtained from your share of rights in a business, which may be paid out to you in cash or in kind. For example, a corporation may pay its stockholders dividends in the form of company's stocks. Singapore has an advanced tax background, which is based on national policy and this means that individuals and businesses are taxed on incomes made in the city-state and on foreign located income submitted into the state.

Our accountants in Singapore can offer more details about the tax treatment of dividends that include taxable and non-taxable shares.

Taxable dividends in Singapore

The next dividends are matter to income tax:

•    income circulation from Real Estate Investment Trusts (REITs) resulting from people  through a company in Singapore or from the carrying on of a trade, commerce or occupation in REITs;
•    foreign-sourced shares derived by individuals over an enterprise in Singapore;
•    dividends funded by co-operatives.

Non-taxable dividends in Singapore

According to the national policy in Singapore, usually the following 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;
•    Singapore dividends from unit companies;
•    dividends from private resident companies;
•    shares from local companies registered on the Singapore Stock Exchange;
•    Singapore dividends from approved CPF investment Scheme agent banks.

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. Otherwise, all individuals need to announce all taxable dividends in the profits tax return under “Other Income”.

Grouping of shares

As our accountant in Singapore reminds, 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 a block of 10,000 shares in X Ltd will have a deduction of the interest expense acquired on the loan, against the dividend income from the same block of 10,000 shares in X Ltd.

Please contact our accounting firm in Singapore for tax advice and other financial services.