Tax Treatment of Dividends
The tax treatment of dividends in Singapore depends on the residency status of the recipient and the source of the dividends.
Dividends paid by Singapore resident companies are tax exempt in the hands of resident individuals and companies. This is because the corporate tax paid by the company on its profits is final.
Dividends paid by foreign resident companies are taxable in the hands of resident individuals and companies, unless they are eligible for the Foreign-Sourced Income Exemption (FSIE) scheme. The FSIE scheme exempts specified foreign-sourced income from tax if it has been subjected to tax in the foreign jurisdiction from which it was received and the headline tax rate of the foreign jurisdiction is at least 15%.
The following are the tax rates that apply to dividends received by resident individuals and companies:
Resident individuals
Up to $20,000: 0%
From $20,001 to $40,000: 2%
From $40,001 to $80,000: 4%
From $80,001 to $120,000: 6%
Above $120,000: 8%
Resident companies
17%
In addition to the above taxes, dividends may also be subject to withholding tax. The withholding tax rate for dividends paid by Singapore resident companies is 0%. The withholding tax rate for dividends paid by foreign resident companies depends on the tax treaty between Singapore and the country where the company is resident.
Here are some additional things to keep in mind about the tax treatment of dividends in Singapore:
Dividends are treated as income in the year when they are declared payable to the shareholders.
You do not need to declare taxable dividends in your Income Tax Return if the organization(s) indicates on the dividend voucher that they will provide the dividend information to IRAS. Otherwise, you must declare all taxable dividends in your Income Tax Return under 'Other Income'.
If you are a resident individual and you receive foreign-sourced dividends, you may be able to claim the FSIE exemption. To qualify for the FSIE exemption, the dividends must have been subjected to tax in the foreign jurisdiction from which they were received and the headline tax rate of the foreign jurisdiction must be at least 15%.
If you have any questions about the tax treatment of dividends in Singapore, you should consult with a tax advisor.
Dividends are profits you receive from your share of ownership in a company, which may be paid to you in cash or in kind. For example, a company may pay dividends to you in the form of company's shares.
Foreign-sourced income that is remitted into Singapore in the form of dividend, branch profits and service income to Singapore tax residents are exempt from tax in Singapore, provided the income is from a foreign jurisdiction with a headline tax rate of at least 15% at the time the foreign income is received in Singapore, and the income has been subject to tax in the foreign jurisdiction.
Foreign income that has been exempt from tax in the foreign jurisdiction as a direct result of a tax incentive granted for substantive business operations carried out in that jurisdiction will be considered as having met the “subject to tax” test.
If an individual resident in Singapore receives foreign-sourced dividends through a partnership in Singapore, these dividends may be exempt from Singapore tax if certain conditions are met.
Singapore operates a one-tier corporate tax system, under which shareholders will not be taxed on dividends paid by a Singapore resident company.
How Bestar can Help
Bestar can help you with the tax treatment of dividends in Singapore in the following ways:
Advise you on the tax implications of receiving dividends. Bestar can help you to understand the tax implications of receiving dividends, whether they are paid by Singapore resident companies or foreign resident companies. We can also advise you on whether you are eligible for the FSIE exemption.
Prepare the necessary documentation for claiming the FSIE exemption. If you are eligible for the FSIE exemption, Bestar can help you to prepare the necessary documentation, such as tax returns and supporting documents.
Represent you before the Inland Revenue Authority of Singapore (IRAS). If you have any queries about the tax treatment of dividends or if you are facing an audit by IRAS, Bestar can represent you in any discussions or appeals.
In addition to the tax treatment of dividends, Bestar can also help you with other tax matters, such as corporate tax, personal tax, and GST. We have a team of experienced and qualified tax advisors who can provide you with the best possible advice and assistance.
Here are some of the benefits of using Bestar to help you with the tax treatment of dividends in Singapore:
We are a reputable and experienced accounting firm.
We have a team of experienced and qualified tax advisors.
We can help you with all aspects of the tax treatment of dividends, from understanding the implications to preparing the necessary documentation and representing you before IRAS.
We offer competitive fees.
If you are interested in learning more about how Bestar can help you with the tax treatment of dividends in Singapore, you can contact us through their website or by phone.
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