Is Dividend Income Taxable in Singapore

Dividends are a popular form of income, but when it comes to tax obligations, many wonder: Is dividend income taxable in Singapore? Most dividends are not taxable for individuals under Singapore’s one-tier corporate tax system. However, the rules can vary for different situations, especially for companies and foreign-sourced dividends.

In this guide, we'll explain the tax treatment of dividend income in Singapore, covering everything from taxable and non-taxable dividends to key rules for individuals and companies. Understanding these rules can help you plan your investments effectively and stay fully compliant with Singapore’s tax regulations.

Quick Overview: Tax Treatment of Dividend Income for Individuals vs Companies

Category	Dividend Type	Taxable or Exempt	Notes
Individuals	Dividends from Singapore resident companies	Exempt	Not taxed in the recipient's hands because profits are already taxed at the corporate level under the one-tier tax system.
Individuals	Foreign-sourced dividends	Generally exempt	Taxable only in limited circumstances, such as when connected to certain business or partnership arrangements in Singapore.
Individuals	Dividends from co-operatives, certain REITs, or specific foreign sources	Taxable	Subject to personal income tax, as these dividends do not benefit from the one-tier tax exemption.
Companies	Dividends from Singapore resident companies	Exempt	Not taxable in the recipient company's hands, as profits are already taxed at the corporate level before distribution.
Companies	Foreign-sourced dividends	Taxable / Exempt (conditional)	Exempt if statutory conditions for foreign-sourced income exemption are met; otherwise, subject to tax.
Companies	Dividends from co-operatives, REITs, and others	Taxable / Exempt (depends)	Tax treatment is determined by the source of the dividend and applicable exemption provisions under Singapore tax laws.

What Counts as a Dividend

In Singapore, dividends refer to distributions made by a company to its shareholders, typically in the form of cash or additional shares. These can include:

Cash dividends paid directly to shareholders
Stock dividends, also called scrip dividends, where new shares are issued instead of cash
Unit trust distributions and REIT income, which are subject to tax rules

Singapore operates under a one-tier corporate tax system, which means a company’s profits are taxed at the corporate level at a flat rate of 17%. As a result, dividends paid to shareholders are generally exempt from further taxation, allowing investors to receive their returns without additional personal tax.

Is Dividend Income Taxable for Individuals

For individuals, most dividends are not taxable in Singapore. This includes dividends from local companies under the one-tier corporate tax system, which means no further tax is levied on the individual.

Additionally, foreign-sourced dividends are generally exempt for individuals unless the dividends are received via a Singapore partnership or as part of a business activity in Singapore.

When Are Individuals Taxed

Co-operative dividends are taxable for individuals.
REIT distributions are not taxable unless they are received through a partnership or in the course of carrying on a trade in REITs.
Scrip dividends are treated the same as cash dividends and are not taxable, unless the distribution arises from a taxable source such as co-operatives.

These rules have exceptions, and individual circumstances can affect taxability. Always consult a professional tax advisor or accountant, and refer to the IRAS website for up-to-date guidance before filing your taxes.

Reporting Dividend Income

In most cases, individuals do not need to report dividend income, as it is not taxable under the one-tier system. However, if you receive taxable dividends, such as from co-operatives or certain REITs, you must report them as "Other Income" in your tax return.

Is Dividend Income Taxable in Singapore for Companies

Singapore-Source Dividends

For companies, dividends from Singapore companies are exempt from tax when received, as long as the dividend-paying company is incorporated in Singapore. This exemption aligns with the one-tier system.

Foreign-Sourced Dividends (FSIE)

For foreign-sourced dividends, companies may be subject to tax unless they meet the Foreign-Sourced Income Exemption (FSIE) criteria. To qualify, the company must demonstrate all of the following:

Subject-to-tax in the source country (indicating underlying tax was paid).
The headline tax rate in the source jurisdiction is at least 15%.
The company is the beneficial owner of the dividends (ensuring it controls the income and is not a conduit for another party).

REIT Distributions for Companies

REIT distributions are generally taxable for corporate shareholders, but portions may be classified as return of capital, which are not immediately taxable and instead reduce the shareholder’s cost basis. Other portions may be treated as ordinary income, capital gains, or qualified dividends depending on IRS classifications.

Withholding Tax (WHT)

Singapore does not impose withholding tax on dividends paid by Singapore-resident companies, regardless of whether the recipient is an individual or a company. This one-tier tax system makes Singapore one of the most favorable jurisdictions for dividend-paying companies. However, withholding tax may still apply to other types of cross-border payments, such as interest, royalties, or certain REIT distributions.

How to Report Dividend Income in Singapore

For Individuals

Step 1: Identify taxable dividends

Taxable dividends include:

Dividends from co-operatives
Dividends from Real Estate Investment Trusts (REITs) received through a partnership
Foreign dividends received through a partnership in Singapore (unless specific exemptions apply)

Dividends from Singapore companies under the one-tier system are non-taxable and do not need to be declared.

Step 2: Gather supporting documents

Keep dividend statements or vouchers, especially for foreign-sourced dividends, as reference when reporting.

Step 3: Report on your income tax return

For Companies

Step 1: Identify taxable dividends

Taxable dividends may include:

Dividends from co-operatives
Foreign-sourced dividends through partnerships
Certain REIT distributions

Step 2: Prepare documentation

Collect proof of tax paid abroad, documents confirming beneficial ownership, and other relevant records.

Step 3: Report in your company’s tax return

All dividend income, whether taxable or not, must be declared when filing annual returns with the Inland Revenue Authority of Singapore (IRAS). Include eligible foreign-sourced dividends and supporting documents according to IRAS guidelines.

Step 4: Seek assistance if needed

Services such as Swiftly’s taxation services can help streamline filings and ensure compliance with Singapore tax regulations.

FAQs

What is the dividend tax rate in Singapore?

There is no “dividend tax” in Singapore. Unlike many countries, where dividends are taxed separately, company profits in Singapore are taxed at the corporate level, and dividends paid to shareholders are not taxed again.

Are dividends received by a Singapore resident company taxable?

No, dividends received from Singapore resident companies are generally not taxable under the one-tier corporate tax system.

Are foreign-sourced dividends received by a Singapore company taxable?

Foreign-sourced dividends are generally exempt if they qualify for the Foreign-Sourced Income Exemption (FSIE), subject to certain conditions, including tax paid in the source country and beneficial ownership.

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Complete Guide to Dividend Income in Singapore