How Singapore Companies Can Pay Dividends to Foreign Shareholders

Singapore companies can pay dividends to foreign shareholders if they have profits available for distribution and complete the required approvals. Foreign ownership does not itself prevent a shareholder from receiving dividends.

How to pay a dividend to a foreign shareholder

A Singapore company should identify which shareholders are entitled to receive the dividend. If the company has different classes of shares, it should check the dividend rights attached to each class.

Once properly declared, the dividend can generally be paid directly to a foreign shareholder, including to an overseas bank account. Singapore does not generally impose foreign exchange controls restricting the payment of dividends to shareholders overseas.

Dividends must be paid from available profits

A Singapore company can only pay dividends out of profits. Having enough cash in the bank does not by itself mean that the company can distribute that cash as dividends.

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Need support with dividend payments and corporate compliance in Singapore? Contact Dezan Shira & Associates

This matters for companies with accumulated losses. For instance, a company may have S$500,000 (US$390,000) in its bank account but accumulated losses that leave it without enough profits to pay a S$300,000 (US$234,000) dividend.

The company’s financial records should show that it has enough profits to pay the dividend. Dividends also cannot simply be used to return share capital to shareholders. A capital reduction or other return of capital is subject to separate requirements under Singapore company law.

Interim vs final dividends: Who approves the payment?

The approval process differs between interim and final dividends and should be checked against the company’s constitution.

Interim dividends are generally declared by the directors. Subject to the company’s constitution, final dividends are generally recommended by the directors and approved by shareholders. Shareholders generally cannot approve a dividend above the amount recommended by the directors.

The company should document the decision through the appropriate resolutions and record the dividend in its accounts.

Does Singapore tax dividends paid to foreign shareholders?

Singapore operates a one-tier corporate tax system. Dividends paid by a Singapore-resident company under this system are generally exempt from further Singapore income tax in the hands of shareholders.

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Speak with Dezan Shira & Associates about the tax and accounting requirements for distributing profits to foreign shareholders

Singapore also generally does not impose withholding tax on dividends. A Singapore company can therefore generally pay dividends to a foreign shareholder without deducting Singapore withholding tax.

The shareholder may still have tax or reporting obligations in their country of residence.

Paying dividends from Singapore: Contact Dezan Shira & Associates

Dezan Shira & Associates can assist foreign investors with the accounting, tax, and corporate compliance requirements for paying dividends from Singapore to overseas shareholders.

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