Dividend income is a popular form of passive income for investors in Singapore. But do you have to pay tax on it? The answer depends on the source of your dividends and Singapore’s specific tax rules. Here’s a detailed guide to understanding when dividend income is taxable in Singapore and how it affects your personal income tax return.
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📌 Understanding Dividend Income in Singapore
Dividend income refers to the distribution of a company’s profits to its shareholders. In Singapore, dividends can be broadly classified into:
- Tax-exempt dividends – Not subject to income tax
- Taxable dividends – Must be included in your personal income tax return
✅ Tax-Exempt Dividends
Most dividends paid by Singapore-resident companies are tax-exempt for shareholders under the one-tier corporate tax system. This means that the company pays corporate tax on its profits, and dividends distributed to shareholders are not taxed again.
- Dividends from companies listed on the Singapore Exchange (SGX)
- One-tier exempt dividends from private limited companies
- Real Estate Investment Trusts (REITs) distributions to individuals (with certain exceptions)
🚫 Dividends That Are Taxable
While most dividends are tax-free, the following may still be taxable:
- Dividends from co-operatives
- Foreign-sourced dividends received in Singapore (subject to exemptions under Section 13(8) of the Income Tax Act)
- REITs distributions derived from certain income sources
- Dividends paid under the imputation system prior to 1 January 2008 (rare cases)
🌏 Foreign-Sourced Dividends
If you receive dividends from overseas companies, they may be taxable in Singapore unless they qualify for foreign-sourced income tax exemption. To enjoy exemption, the dividends must meet these conditions:
- Subject to tax in the foreign jurisdiction
- Received in Singapore by a resident individual
- From a jurisdiction with a headline tax rate of at least 15%
💡 Reporting Dividend Income in Your Tax Return
For most taxpayers, local dividends do not need to be declared as IRAS already treats them as tax-exempt. However, taxable dividends — especially foreign-sourced ones — should be reported under “Other Income” in your Form B/B1.
📄 Example
You received:
- S$5,000 in SGX-listed company dividends (tax-exempt)
- S$3,000 from a US company (foreign-sourced, potentially taxable unless exempted)
Only the US dividends may need to be reported and taxed, depending on IRAS conditions.
⚠️ Common Misconceptions
- “All dividends are tax-free in Singapore” – Not true; some foreign-sourced dividends are taxable.
- “I don’t have to keep dividend statements” – You should retain all records for at least 5 years.
- “REIT distributions are always tax-free” – Certain components may be taxable.
📌 Final Takeaway
Singapore’s tax system is favourable for dividend investors, especially for local dividends. However, if you receive income from foreign investments, always check whether they are taxable under Singapore’s income tax rules. Understanding these distinctions can help you stay compliant while optimising your returns.
