Email of the day
"A few years ago I became "sold" on Singapore as a region of "good Governance" from Fuller Money. I opened a brokerage account there and learned that they withheld dividend payments on the order of 30% and even though no treaty with my Bahama domicile they would not release my dividends. So I transferred the account and they did everything they could to stall the transfer.
"Of course, had I known this in advance, I would have left all dividends to accumulate. I am now looking for a discount broker in Singapore but have not been successful.
"My observation is that in many ways Singapore and the U.S. are joined at the hip or at least Singapore is intimated by the U.S.
"Thank you for your on going effort to keep the "collective" informed. I don't particular like the socialist connotation of the use of the term "collective" "
David Fuller's view I did chuckle over you last sentence.
It
is true that some perfectly good words that have existed for a very long time
can be given a new meaning by special interest groups. However, I can assure
you that in referring to the Collective of Subscribers, often shortened to the
Collective, there is no socialist connotation implied. Perhaps you or another
subscriber can suggest a more appropriate collective noun for all of you.
Meanwhile,
we like referring to the Collective, feeling that it stands for our shared interests
in the markets, some voluntary pooling of information, and Fullermoney's mission
statement of Empowerment Through Knowledge.
Re Singapore,
I have maintained for decades that it has the best economic governance of any
country.
Eoin
produced this PDF
from Deloitt on international tax. On the first page, under the heading
"Withholding tax" it says:
"Dividends
- No withholding tax is levied on dividends paid by companies resident in Singapore."
This
indicates to us that the problem is not with Singapore.
Eoin
also produced this IRS
form: Federal Income Tax Withholding and Reporting on Other Kinds of
U.S. Source Income Paid to Nonresident Aliens
Here
is the section which appears applicable to you, as a US citizen:
"Dividend
Income
If the dividend income is from a U.S. source and paid to a nonresident alien,
it is reportable for any amount in excess of zero. Withhold at 30% or lesser
tax treaty rate (See Table 1 in IRS Publication 515 or 901). The beneficial
owner of the income may claim the benefit of the tax treaty article which deals
with "Dividend Income." The beneficial owner may claim the lesser
tax treaty rate by filing Form W-8BEN with the withholding agent. The withholding
agent will report the payment on Forms 1042 and 1042-S, even if the entire amount
of income is exempt under a tax treaty."
While not exactly written to enlighten, the implication
seems to be that the US IRS requires its trade partners, of which Singapore
is one of many, to withhold 30% of any dividends paid to US citizens for Uncle
Sam. It also seems that in order to get any of that back, you need to obtain
from the IRS and fill in the forms specified above.
Note:
tax is certainly not our areas of expertise so you might want to check this
out with your accountant.