This article is about Singapore stock brokers and tax for non-residents. Looking for a stock broker in Singapore instead? Read this comparison of the best Singapore brokers and articles on opening a bank account and opening a brokerage account there.
I’ve often get questions about tax on stocks for non-resident investors who have a Singapore stock broker account. The answer is both simple and good news for most investors.
Singapore is an extremely low-tax jurisdiction and if you are non-resident, you should end up paying nothing to the local tax authorities – although obviously you may still owe taxes in your home country.
Tax on dividends in Singapore
Singapore does not currently levy any withholding tax on dividends paid by Singaporean companies (source). This means that you will receive the dividend without any tax deducted. If you are not a Singapore resident, you then have no further liability to pay any tax to the Singaporean government.
Obviously, if you hold non-Singaporean stocks in your brokerage account, they may have had withholding tax deducted in their home country. But that depends on the rules in the home country and not on the rules in Singapore.
If that happens, you may be able to reclaim some of the tax withheld from the foreign government. That usually depends on the double taxation agreement between your home country and the foreign country, not any agreements with Singapore.
For residents, dividend income is taxable. However, Singaporean companies have paid all the tax they need to at the corporate level, so no further tax is from shareholders (source). And since 2004, foreign dividends have also been exempt from tax (source).
Capital gains tax in Singapore
Singapore has no capital gains tax (source). So whether you are a resident or non-resident makes no difference – you will not be charged capital gains tax by the Singaporean government when you sell shares.
If the shares are not listed in Singapore, the country in which they are listed may sometimes withhold capital gains tax on the proceeds (although this is unusual). Again, this depends on local rules in that country and any tax that you may be able to reclaim depends on agreements between your home country and the foreign country, not Singapore.
Other investment taxes in Singapore
Stock broker fees and commissions are subject to goods and sales tax (GST) of 7%. However, services supplied to an overseas person are exempt from GST (source).
Hence, non-resident clients of a Singapore stock broker will not be charged GST on their fees. Your broker will usually get you to sign a form certifying you are not a resident when you open the account.
This article is simply an overview of the rules and is not intended as investment advice. Tax is complicated and individual circumstances vary greatly. You should consider consulting a specialist adviser for advice on your personal position.
4 replies on “Tax on Singapore stocks for non-residents”
There seem to be 2 ways for US citizens to purchase stock in Singapore companies. One is the ADR route which has the downside of difficult to identify fees and high transactions costs. And of course the other is to use an online broker, like Fidelity to purchase the stock directly on the SGX. This way has no random fees and transaction costs are significantly lower, by as much two thirds. There is a 1% fee placed on currency exchange if one wants to convert Singapore dividends into US dollars through Fidelity.
So my question is; why does anyone even buy an ADR version of a Singapore stock when they have greater control, liquidity and predictability by owning the SGX original version? What am I not seeing, if anything?
In many cases, the ADRs are really a holdover from when it was much more difficult or costly to trade foreign stocks directly. There are still markets where this applies and it may make sense to use ADRs for deals on those instead of trying to find a broker who can buy direct, but not for Singapore stocks which are easy to access.
Habit means that people keep using the old system or stick to brokers that don’t offer overseas markets. But for markets where it’s relatively easy now to trade the foreign shares directly, then it usually makes sense to go that route.
The only real arguable advantage of ADRs is that everything is priced and settled in US dollars, which some US investors may prefer to avoid converting currencies or just be able to see the US dollar value of the portfolio at a glance.
How does an Asian nonresident open an account in Singapore? Do you require income tax identification number of the nonresident?
Hello,
Am Srinivasan from India, looking to open a Demat account in Singapore.
Could i able to open from here. Is that possible ??
Thanks.