MrPanda Posted September 9, 2022 Share Posted September 9, 2022 Hi, I am a citizen of Singapore who is interested in buying US stocks. However, just today I realised that there is a 30% withholding tax on dividends for non-US persons who buy American dividend-paying stocks. My question is : is it still worthwhile to buy and hold such stocks (American dividend-paying stocks) as a non-american considering there is a 30% tax on dividends? I am a value investor so dividends and reinvested dividends are very important to my long-run returns ... Thanks Link to comment Share on other sites More sharing options...
pcech Posted September 9, 2022 Share Posted September 9, 2022 Check, if there is a tax treaty between Singapore and US in this matter. The tax treaty may stipulate a lower rate. Link to comment Share on other sites More sharing options...
MrPanda Posted September 9, 2022 Author Share Posted September 9, 2022 13 minutes ago, pcech said: Check, if there is a tax treaty between Singapore and US in this matter. The tax treaty may stipulate a lower rate. Unfortunately, currently there is no tax treaty between Singapore and US ... Link to comment Share on other sites More sharing options...
Gregmal Posted September 9, 2022 Share Posted September 9, 2022 I’ll take your word for it but I’m pretty sure a w8ben form clears the withholding. If I am wrong then I guess it’s a similar jurisdiction to the islands like cayman and Bermuda were there’s no treaty and just straight 30% which sucks. But I’ve had managed accounts in Singapore before and don’t recall this being an issue. Link to comment Share on other sites More sharing options...
PJM Posted September 9, 2022 Share Posted September 9, 2022 Hi - 30% WHT is correct for countries that has no treaty. MY Hong Kong accounts face the same 30% tax. Unfortunately there is no way to get credit or reclaim it as far as I know. Link to comment Share on other sites More sharing options...
scorpioncapital Posted September 9, 2022 Share Posted September 9, 2022 I notice Singapore has no capital gains tax. It seems the policy of US to somewhat penalize tax havens with higher dividend withholding tax. I guess you could just buy stocks that pay no dividends or be happy you don't pay capital gains tax in exchange for higher dividend taxation. Link to comment Share on other sites More sharing options...
JAK Posted September 9, 2022 Share Posted September 9, 2022 Depends on the location, and what the alternatives are, at least for taxable accounts: For example, I live in France. The French have a flat 30% tax rate on dividends. Therefore, for the most part, doesn't matter which stocks I buy, I'll still pay 30% one way or another. Just some variation on who and when I pay. For US stocks, with W-8BEN, I pay 15% withholding tax (with a tax credit), and pay the remaining 15% (so 30% total) to France a year later. For UK stocks, I pay 0% withholding, but 30% to France the next year. So only difference with US stocks being who gets the tax, and I benefit from an extra 15% for a year. Since I'll pay 30% one-way or another, my choice is really about where the returns come from (after-tax dividends and/or price appreciation), rather than US vs. non-US. To give another example, in Ireland, as far as I know, dividend income is considered under income tax. Therefore, anyone earning above €36,800 would essentially see their dividends taxed at 40%, so again, in that case, its a matter of looking at returns rather than US or non-US (as 0%, 15%, or 30% withholding wouldn't really matter). However, if your local tax rate is 0%, and you could avoid that 30% friction by choosing non-US stocks (all else being equal), then it would make sense to take that into account. Link to comment Share on other sites More sharing options...
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