Singapore is widely regarded as one of the world’s most attractive financial and business hubs, thanks to its robust economy, pro-business policies, and competitive tax framework. Many entrepreneurs and corporations are drawn here not only for its investment opportunities but also for its seamless company incorporation in Singapore, which offers a gateway to the region’s growing markets.
For both local and foreign investors, one of the biggest draws of investing in Singapore lies in its treatment of dividends.
But this raises a common question: Are dividends taxable in Singapore? The answer depends on the source of the dividend and whether you are a local or foreign investor. This guide breaks down everything you need to know about dividend taxation in Singapore.
Understanding Dividends
Dividends are payments made by a company to its shareholders, usually from profits generated during a financial year. They can take the form of:
- Cash dividends – paid directly in cash.
- Stock dividends – additional shares issued to shareholders.
- Other forms – such as property or scrip dividends.
Before issuing a dividend, a Singapore-resident company must ensure:
- It has sufficient profits.
- Directors propose the dividend.
- Approval is obtained at an Annual General Meeting (AGM) or through a board resolution for interim payouts.
- Proper documentation is prepared—financial statements, minutes, and dividend registers—all crucial for regulatory compliance
For investors, dividends are an important source of passive income. But how they are taxed varies across jurisdictions. Singapore’s system is unique because of its one-tier corporate tax system.
The One-Tier Corporate Tax System in Singapore
Since 2003, Singapore has adopted the one-tier corporate tax system. Here’s what that means:
- Companies pay corporate income tax (currently at 17%) on their taxable profits.
- Once profits are taxed at the corporate level, dividends distributed to shareholders are exempt from further taxation.
This avoids the issue of “double taxation,” where both the company and the shareholder are taxed on the same income.
Key Features:
- Taxes are levied only on corporate profits, not on dividends paid out to shareholders
- The one-tier system streamlines compliance and simplifies distribution across all levels of shareholders in a corporate group
- There’s no withholding tax on dividends—both local and foreign investors receive the full payout
Key takeaway: Shareholders—whether individuals or companies—do not need to pay tax on dividends distributed by Singapore tax-resident companies.
Are Dividends Taxable for Local Investors?
Tax-Exempt Dividends
For Singapore tax residents, most dividends received are not taxable. These include:
- Dividends paid by a Singapore-resident company under the one-tier system.
- Dividends from real estate investment trusts (REITs), except those that are specifically designated as taxable.
- Foreign dividends received in Singapore (subject to certain conditions, such as being exempt if remitted by individuals not through a partnership).
Taxable Dividends
While rare, some dividends may still be taxable. These include:
- Dividends from co-operatives (e.g., NTUC FairPrice) are taxable—they fall outside the one-tier regime
- Foreign dividends received through a partnership in Singapore are taxable, even if the individual is tax-resident
- REIT distributions received through business channels or a partnership may also be taxable
- Foreign-sourced dividends may be taxed if:
- Not taxed abroad,
- The foreign jurisdiction’s tax rate is below 15%,
- Or other IRAS conditions are not met
- Dividends declared in Singapore but earned abroad can be taxed between 0% to 17%, depending on circumstances (e.g., source and tax treaties)
For most individual investors, however, dividends from listed companies and Singapore-resident firms are tax-free.
Are Dividends Taxable for Foreign Investors?
Dividends from Singapore Companies
If you are a non-resident investor, dividends paid by Singapore tax-resident companies are generally not subject to withholding tax. You receive the full dividend payout, free of additional Singapore taxes.
This makes Singapore highly attractive for global investors looking for exposure to Asian markets.
Dividends from REITs
The main exception lies in REIT distributions:
- For non-resident individuals, certain REIT distributions are subject to 10% withholding tax (unless exempted).
- For non-resident non-individuals (e.g., foreign companies), a 17% withholding tax may apply.
Thus, while most dividends are tax-free, REIT distributions may be partially taxable for foreign investors.
How Does This Compare Internationally?
Many countries impose taxes on dividend income, often making Singapore stand out as an attractive investment hub:
- United States – Dividends are taxable for individuals, with rates depending on whether they are qualified or ordinary dividends.
- United Kingdom – Individuals pay dividend tax above a certain allowance.
- Australia – Dividends may come with franking credits, but are still taxable at personal rates.
- China – Individuals generally pay a 10% withholding tax on dividends from listed companies, though treaty rates may reduce this.
- India – Dividends are taxable in the hands of shareholders at their applicable income tax slab rates. Companies also withhold tax before distribution.
- Japan – Dividend income is taxed at a flat national rate of 15%, plus local inhabitant tax, though reduced rates apply for certain listed stocks.
- Hong Kong – Like Singapore, dividends are not subject to tax, enhancing its appeal as a regional financial hub.
By contrast, Singapore’s no-dividend-tax policy gives investors higher net returns and simplifies compliance, strengthening its competitive position not just globally but also within Asia.
Reporting Dividend Income
- Tax-exempt dividends for individuals generally do not need to be declared on personal tax returns—unless the dividend voucher doesn’t indicate IRAS submission
- Taxable dividends—such as those from partnerships, cooperatives, or foreign income not meeting exemption criteria—must be declared under “Other Income” in the tax return
- Companies must report all dividend income, even if it’s tax-exempt, in their annual corporate tax filings
Practical Considerations for Investors
If you are investing in Singapore, here are some important things to keep in mind:
- Confirm the source of dividends – Ensure the company is Singapore tax-resident to benefit from tax-exempt dividends.
- Understand REIT distributions – Check if part of your REIT income is taxable, especially as a foreign investor.
- Foreign-sourced dividends – If you are a Singapore tax resident, foreign dividends may be tax-exempt if certain conditions are met.
- Stay updated with IRAS guidelines – Tax regulations can evolve, so always refer to the Inland Revenue Authority of Singapore (IRAS) for the latest rules.
Conclusion
So, are dividends taxable in Singapore? For the majority of investors, the answer is no. Thanks to the one-tier corporate tax system, dividends from Singapore tax-resident companies are distributed tax-free, making Singapore a prime location for income-seeking investors.
However, there are exceptions—particularly with REIT distributions and certain foreign dividends—so investors should remain informed.
Whether you are a local or foreign investor, Singapore’s tax-friendly dividend policies can significantly enhance your after-tax returns, reinforcing its reputation as a global investment hub.
If you’re looking to set up or manage your business in Singapore and want expert guidance on compliance, taxation, and corporate governance, Timcole, a leading corporate service provider in Singapore, can help. Our team of experienced professionals makes business administration simple and stress-free, so you can focus on growing your investments.
