Are Dividends Taxable in Singapore? What You Need to Know – with WLP

Are Dividends Taxable in Singapore? What You Need to Know — with WLP 

Dividend income is an important source of returns for many shareholders and business owners. If you’re in Singapore (or investing there), it’s vital to understand how dividends are taxed—or not—so you can plan your finances properly. WLP Accounting helps many clients navigate this territory, so here’s a breakdown.

What Are Dividends?

A dividend is a payment from a company’s profits to its shareholders as a return on investment. Dividends can come in different forms:

• Cash dividends – actual cash disbursed.
• Stock dividends – issuance of additional shares instead of cash.
• Interim dividends – paid during the company’s financial year.
• Final dividends – paid after the end of the financial year, once annual accounts are approved.

Singapore’s Corporate Tax System: One-Tier System

Singapore uses a one-tier corporate tax system, which means that corporate profits are taxed at the corporate level only. When a company distributes dividends from its after-tax profits, shareholders generally do not pay further tax on those dividends.

That means dividends from Singapore resident companies are largely exempt from personal income tax for shareholders. WLP often advises clients to ensure that the profits have been taxed correctly at the corporate level, so that the exemption applies cleanly.

When Dividends Are Non-Taxable

Here are the common situations in which dividend income is not taxable in Singapore:

• Dividends paid by Singapore-resident companies from profits that have already been taxed.
• Distributions to individual shareholders (not via partnerships or through business operations) under the one-tier corporate tax system.
• Most REIT (Real Estate Investment Trust) distributions to individual investors (though there are exceptions).

Exceptions: When Dividends Might Be Taxable

There are some cases in which dividends can be taxable (or at least need more careful handling). These include:

1. Foreign dividends received through a partnership 

If an individual receives foreign-sourced dividends via a partnership, these might be taxable because partnerships are not separate tax entities; profits are attributed to partners.

2. REIT distributions via partnership or business operations 

If you receive REIT distributions not simply as an individual investor but through a structure (e.g. partnership) or it’s part of business income, then tax treatment may differ.

3. Dividends from cooperatives 

Some cooperatives may not be covered under the same exemptions.

4. Other special circumstances 

E.g. if documentation is missing, or the entity paying out the dividends does not fall under the resident or regulatory frameworks.

Reporting Dividend Income

Even though many dividends are non-taxable, there are steps you still need to take:

• Keep proper documentation: dividend vouchers, company notices, Board resolutions, shareholder registers. WLP always emphasizes this, since missing documents may lead to IRAS queries.
• Declare what is required on your tax return under “Other Income” if needed. Non-taxable dividends often do not need separate tax paid, but you should still ensure they are declared correctly.
• Ensure clarity on source of dividends (Singapore resident company vs foreign, via partnership or direct) to confirm applicability of exemptions.

Why It Matters

• Tax efficiency: Dividends often represent a way to withdraw profits more efficiently than via salary or bonuses (which are subject to personal income tax and other contributions).
• Financial planning: Knowing which income streams are taxable helps you plan your cash flow, investment returns, and company distributions.
• Avoid surprises: Mis-classification of dividends, or incomplete documentation, can lead to unexpected tax liabilities or IRAS audits.

How WLP Can Help

At WLP, we assist clients in the following ways:

• Reviewing your company structure to ensure that dividend distributions are aligned with tax exemptions.
• Ensuring all required corporate documentation is in order (board resolutions, dividend vouchers, etc.), which is essential for IRAS compliance.
• Advising on foreign-sourced dividends, partnerships, and cross-border investment structures to mitigate tax risk.
• Helping with proper tax reporting and ensuring that you aren’t paying more tax than necessary (while staying fully compliant).

If you want, WLP can prepare a customised review of your dividend-income situation (company dividends, foreign ones, REITs, etc.), so you can see exactly where you stand.