Guide on dividends in Singapore

4 minute read

Dividends are payments released by corporations to their shareholders, generally as a way to distribute profits as a reward for their investment in the company. The company’s board of directors decide on and manage dividends, but it is the shareholders that must approve them through their voting rights.

In Singapore, dividends can be paid as shares of stock or other property, but cash dividends are still the most common. Regardless of the dividend type, they remain a great way to provide stable income and morale among shareholders.

Overview:

 

Can you pay dividends?

Yes, you can. As already stated, dividends are paid to the company’s shareholders. However, it is important to note that you can pay dividends only out of the business’s profits.


Therefore, a company should declare dividends only when its decision-makers are sure that it has profits that it can pay dividends from. Otherwise, board members may face legal consequences.

 

Types of dividends – Interim and Final

There are two main types of dividends a business can pay – interim and final.

 

Interim dividends

An interim dividend is announced by the company’s board before annual profit or loss is ascertained and any time between the two company’s annual general meetings. It is paid out of retained earnings in the profits and loss accounts or out of the profits of the accounting year in which the dividend is to be announced.

 

Final dividends

On the other hand, a final dividend is announced after the financial statement for the fiscal year has been reported during the company’s annual general meeting. In this case, the financial position and profitability position needs to be ascertained.

 

 

Is dividend income taxable in Singapore?

When it comes to Singapore dividend tax, there are non-taxable and taxable dividends.
Non-taxable dividends include:

  • Most dividends paid on or following January 1 2008, by a Singapore resident company under the one-tier corporate tax system
  • Foreign dividends received on or following January 1 2004, by resident individuals
  • Income distribution from REITs (Real Estate Investment Trusts)

On the other hand, the following Singapore dividends are taxable:

  • Dividends that are paid by co-operatives
  • Foreign-sourced dividends derived by individuals through a Singapore-based partnership
  • Income distribution from REITs derived by individuals through Singapore-based partnerships, or from the carrying on a trade, profession, or business in REITs

 

 

Is foreign dividend income taxable in Singapore?

In some cases, foreign dividends are taxable. For example, if they are derived by individuals through a partnership in Singapore. However, in this case, conditions may apply. See Tax Exemption for Foreign-Sourced Income for more information.
If, on the other hand, a resident individual receives foreign-sourced dividends, they may be taxable if they are not received through a Singapore-based partnership.

 

How are dividends in Singapore calculated?

There are a few steps involved in calculating dividends:

  • Determine how many shares of stock you hold
  • Determine the dividends paid per share (DPS)
  • Multiply the DPS by the number of shares

Furthermore, if you want to find the dividend yield in Singapore, here is what you need to do:

  • Determine the share price of the stock you are analysing
  • Then, determine the DPS of the stock
  • Next, divide the DPS by the share price
  • Finally, use dividend yields to compare opportunities for investment.

 

How are dividends reflected in the company’s management accounts?

Stock dividends don’t affect asset changes of the balance, but they do affect the equity side by reallocating part of the retained earnings to the common stock account.
Therefore, if a business pays stock dividends, the company’s retained earnings are reduced and the common stock account is increased.
The cash dividend primarily affects the cash and shareholder’s equity accounts. It is important to keep in mind that there is no separate balance sheet account for dividends after they have been paid.
Still, after the dividend is declared and before the payment is made, the business records a liability to its shareholders in the dividend payable account.

 

 

How can you declare dividends and what is the necessary paperwork?

In general, directors will recommend a certain rate to be paid as dividends. Then, this is voted on and approved by the company’s shareholders in the annual general meeting (AGM). This is known as final dividends, as stated above.
As a director, you may also pay interim dividends if this is justified by the company’s profits. These dividends are paid before the AGM, accompanying the company’s interim financial statements.
When it comes to the necessary documentation for declaring Sg dividends, make sure you have the following documents:

  • Dividend vouchers
  • Board meeting minutes (including date, location, who was present, number of dividends to be paid per share, and the fact that the decision has been made)
  • Dividend register
  • Resolution to pay an interim dividend or proposed final dividend
  • Shareholders’ approval
  • Warrants issued to each shareholder

 

 

What is the limit of dividends to be paid?

There is no limit of dividends per se. However, you need to pay attention to how much profit your company has made.
In other words, you can distribute all profit remaining after paying taxes and settling losses. Keep in mind that, if your company declares and pays dividends but it hasn’t made any profits, the directors may be found guilty of a criminal offense.

 

 

How often are dividends paid?

Most dividends are paid four times per year on a quarterly basis. However, some companies pay dividends twice a year, once a year, or even monthly.
In other words, there are no set rules as to how often companies should pay dividends. Rather, companies have the freedom to set their own policies regarding dividend payments.

 

 

Next steps

Dividends in Singapore are not quite the easiest feat for board members. There are quite a few factors you need to consider, but if you approach the issue carefully and with the appropriate information, you will be able to master it sooner than you may think.
In the beginning, the whole matter may seem complex to you. If that is the case, we are here to help. Take a look at our accounting services to find out more information.

 

Other articles that might interest you

Related content

Get in touch.

Start your Sleek journey today

Ready to grow your business to the next level?
Let us help take the load off your shoulders so you can continue doing what you love.

50GB data with unlimited talktime for only S$18/month and additional add-ons!

Circles.Life is a telco provider in Singapore that provides no-contract mobile plans. Their end-to-end integrated service allows customers to manage and design a plan that best fits their needs.

Enjoy the following offers:

  • 50GB data with unlimited talktime (SIM-only) for S$18/month

Once you are a Sleek client, you can access this offer.

Get access to investors, corporates and business advisors

TiE Singapore is a vibrant eco-system of Asian entrepreneurs, angel investors, venture capitalists and industry professionals – TiE has 61 worldwide chapters, 10,000 Startups, 80,000 Attendees and 15,000 members.

Benefits:

  • Exclusive access to an ecosystem of advisors, mentors, investors, corporate heads via discounted programs
  • Expand your reach beyond Singapore by attending all local and global events
  • A chance to showcase and pitch your ideas to industry leaders and investors
  • Network and build connections to engage with business experts, thought leaders and fellow entrepreneurs

Form your US company with Stripe Atlas

Stripe Atlas is a safe and easy-to-use platform for forming a US entity by removing obstacles that are typically associated with starting a company such as – legal paperwork, bank lines, obscure fees and regulatory barriers.

Enjoy the following benefits:

  • Get a discount from SGD $200 onwards on an Atlas incorporation
  • Use their services from anywhere in the world
  • An opportunity to connect with other founders and learn from experts

Enjoy up to SGD $1,425 off on eBay store and promotion fees that are incurred in the first quarter of your operation

eBay is a world-leading online marketplace that facilitates consumer-to-consumer and business-to-consumer sales.

Sleek clients can benefit from a special promotion when they:

  • Sign up as new sellers on eBay
  • Offer a minimum of 100 SKUs in their online store

You will be eligible for:

  • 100% reimbursement of the store and promoted listing fees for up to 3 months, capped at SGD $1,425, subject to promotion T&Cs

How do you qualify?

  • Leave your contact details in eBay’s New Seller Form
  • eBay’s New Seller Account Management team will review your application and reach out to guide you on the account setup
  • Once approved you will receive a promotional email from your Account Manager

Enjoy your stay with Hmlet by getting corporate rates

Hmlet provides a custom designed, fully furnished, affordable and hassle-free coliving housing solution, perfect for entrepreneurs arriving in Singapore.

Enjoy the following benefits:

Get 10% when you stay with Hmlet in Singapore
Perfect opportunity to expand your network with Hmlet’s diverse community
Enjoy dedicated assistance from Hmlet Community Managers
Flexible month-to-month membership plans

*For new members only

Promotion is valid for any length of stay up to one year.

Contact Joanna at +65 8462 6446 to get the discount.

Gain instant access to the top coworking spaces around Singapore with FlySpaces Passport


FlySpaces provides short-term flexible workspace solutions, fully-furnished and fully-serviced, for entrepreneurs, SME’s, and corporates setting up their businesses in Southeast Asia.

Enjoy the following benefits:

  • 1 month free trial of Passport Starter package and 25% off the first month of any Passport package
  • Flexible packages that scale with your business
  • Dedicated assistance from a FlySpaces Space Expert

*For new members only 

Get 3 months free trial

Metigy is the world’s leading Digital Marketing Decision Support technology made for SME Marketers. Metigy’s AI platform helps SME’s achieve 2x-3x improvement quarter on quarter.

  • AI-powered real-time insights and recommendations platform
  • Set objectives and follow Metigy’s content recommendations
  • Planning calendar, content library and social analytics
  • Prioritised to-do list and approval workflows

Once you are a Sleek client, you can access this offer.

Join Hubspot for Startups and get up to 90% off your Hubspot subscription in your first year

We’re excited to partner with HubSpot for Startups to offer their program designed specifically to help startups grow and scale better, and faster – at a startup-friendly cost! Read on to learn more about the program.

What is the HubSpot for Startups program?

  • Education resources and tailored training
  • Professional software, startup pricing
  • Integrated platform for startups

Who is eligible?

Any startup that is a current customer of Sleek and meets certain funding criteria is eligible for this exclusive program! See below for more details:

  • A startup with under $2 million in funding: ou are eligible for up to 90% off HubSpot software in your first year, 50% off in your second, and 25% off ongoing.
  • A startup who has raised over $2 million in named funding up to and including Series A: You are eligible for up to 50% off in your first year, and 25% off ongoing.

*The HSFS startup-friendly pricing is only applicable to net-new HubSpot Hubs or upgrades of existing Starter subscriptions to Basic, Professional, or Enterprise products; customers may not apply the startup program pricing to existing Basic, Professional, or Enterprise Hubs.

Once you are a Sleek client, you can access this offer.

Get 10% discount on Google Workspace licenses

Google Workspace offers custom email for your domain, online storage, shared calendars and a range of collaboration tools to increase the productivity of your team.

  • Gmail for business
  • Gsheets, Gdocs, Gslides and Google Meet
  • High security and online file storage

A 10% discount is provided for all new domains and transfers.

Once you are a Sleek client, you can access this offer.

Get US$5,000 in AWS Promotional Credits

*Only available for technology startups

Amazon Web Services provides startups with low-cost, easy-to-use infrastructure needed to scale and grow any size business.

You will be eligible for:

  • US$5,000 in AWS Promotional Credits valid for 2 years
  • 1 year of AWS Business Support (up to US$1,500)
  • Opportunities to qualify for additional credits 
 
Note: Companies may not be eligible for AWS Activate Credits if they previously received a similar or greater amount of credit. Companies may be eligible to be “topped up” to a higher credit amount if they previously received a lower credit.  For more information, please review the AWS Activate Terms & Conditions.
 
Once you are a Sleek client, you can access this offer.

Manage your company spending with a 3-month free trial

Spenmo is a B2B spend-management platform with physical and virtual card offerings. We aim to digitise expense processes and help companies eliminate fraud and overspending.

Enjoy the following benefits:

  • Free physical and virtual cards for up to 15 employees and 2% unlimited cashback for the first 6 months
  • $100K worth of free local and international invoice payments
  • Free cash reimbursement software

Once you are a Sleek client, you can access this offer.

Get S$10,000 in processing volume credit

Stripe is the best software platform for running an internet business. Stripe provides the technical, fraud prevention, and banking infrastructure required to operate online payment systems.

  • Fast, reliable and secure
  • Faster eligibility period for custom processing rates
  • Priority betas and special event access

Once you are a Sleek client, you can access this offer.

Free multi-currency account for businesses and online sellers

WorldFirst is an innovative global payment platform, helping businesses move money around the world faster, easier, safer and cheaper. 

Sleek clients can enjoy the following:

  • Open up to 10 international currency accounts for free: SGD, USD, GBP, EUR, CAD, AUD, NZD, JPY, HKD & CNH
  • Receive, hold and make payments in international currencies
  • Open your account for free with no monthly account fees and no annual transfer limits
  • Access great exchange rates
  • Manage your global finances all on one platform
  • Instant FX transactions between currency accounts

Do note that WorldFirst only works with online sellers.

Open a Singapore dollar business account from anywhere.

Wise is a global technology company that’s building the best way to move money around the world. Whether you’re sending money to another country, spending money abroad, or making and receiving international business payments, Wise is on a mission to make your life easier and save you money.

Enjoy the following benefits:

  • Enjoy S$2,600 fee-free transaction
  • Get bank details in 6 currencies: SGD, GBP, EUR, USD, AUD, NZD
  • Sleek customers get access to the Wise Platinum debit Mastercard
  • Get support from our global team in Singapore, Europe, and the US