Non-resident directors of companies in Singapore have distinct tax responsibilities compared to resident directors. Understanding these tax requirements is vital for ensuring compliance. Below are the outline of the key scenarios and associated tax obligations.
Scenario 1: Receiving Fees as a Non-Resident Board Director
If the director earn director’s fees or remuneration as a non-resident director of a Singapore tax-resident company, the following applies:
• Employer’s Duties:
o Deduct tax at 24% the director’s remuneration.
o File the withholding tax online and pay it via the myTax Portal by the 15th day of the second month after the payment is made. The employer will receive a payment confirmation letter for record-keeping.
• Director’s Responsibilities:
o Filing a tax return is unnecessary if tax has already been withheld by the employer.
o If receive a tax bill or notice, submit the payment confirmation letter to resolve any discrepancies.
Scenario 2: Gains from Stock Options (ESOP) or Stock Awards (ESOW)
If director receive financial benefits from stock options or the vesting of stock awards:
• Employer’s Duties:
o Report these gains by filing the appropriate form within 30 days of the stock option exercise or share acquisition. This can be done online through the designated platform.
• Director’s Responsibilities:
o Director will receive a tax bill detailing the amount owed, which must be pay to IRAS directly.
Scenario 3: Earnings as Both Board and Executive Director
If directors are compensated for the role as a board director and also receive employment income as an executive director:
1. Director’s Fees as a Board Member:
o Tax must be withheld for board fees unless the director’s physical presence in Singapore exceeds 183 days within the calendar year.
2. Salary as Managing Director:
o Tax withholding is not required for employment income.
3. Employer Reporting:
o Ensure the employee receives the IR8A by 1 March for personal income tax filing purposes.
