Payment of dividends for Singapore companies
Last updated on 25 April 2022
Dividends are paid to shareholders of a Singapore company out of the profits made by the company. In most cases, dividends are paid in proportion to the shareholding of the owners of the company. To be able to issue dividends, the directors of the company must recommend a dividends payment to the shareholders in the form of a declaration. Dividends can be paid in cash or in-kind (such as company stocks).
As dividends can only be paid out from the company’s profits, directors and shareholders may want to consult an accounting services Singapore firm before distributing and paying out the dividends. Furthermore, dividends are generally declared and paid out before filing the company’s financial statements (also known as interim dividends). More details can be found in the table below.
Once the dividends are finalised, documentation such as directors’ resolutions, dividend voucher and minutes of the meeting need to be prepared. Most firms that provide corporate secretarial services and accounting services in Singapore will be able to help you meet these obligations.
Most dividend payments are not subject to individual income tax under the one-tier tax system in Singapore. However, certain dividend payments do incur personal income tax. These include dividends paid by co-operatives, income distribution paid by a real estate investment trust to an individual in a partnership in Singapore, or dividends paid by a foreign entity derived by individuals through a partnership in Singapore. To ensure you and your company comply with the tax rules, consider engaging a company providing accounting services in Singapore.
Company directors must ensure that there are profits from which to pay dividends to shareholders. Failure to do so may breach the directors’ fiduciary duties, and the directors may be criminally and civilly liable. In addition, shareholders who received wrongful payments of erroneous dividends declaration may be required to repay the amount they wrongfully received.