Generally, director’s fees are sourced in the country where the company is resident. This is because all the functions of the directors in determining and controlling activities to earn the profits of the company are carried out in that country.
Taxable Director’s Fees
Where director’s fees are taxable in Singapore, it will be treated as income of the year in which the director is entitled to the fee, as outlined below:
|Approval||Earliest date of entitlement||Reasoning|
|In arrears||Date of AGM when the fees are approved.……………….||If the director has already rendered the requisite services, their fee myst be disclosed and approved by shareholders before they can be paid to him.|
|In advance||Date when services are rendered.||If director’s fees are approved at the company’s AGM before the director has rendered the requisite services, the director is entitled to the fee when they have earned it by rendering the requisite services.|
Non-Taxable Director’s Fees
As a general rule, director’s fees derived from a company that has no presence in Singapore are not liable to Singapore tax, even if the director may, on some occasions, conduct their meetings in Singapore. However, there may be instances where payments made for discharging duties carried on within Singapore are taxable. Refer to the IRAS help guide here for more information.
Adding Director’s Fees on SimplePay
To add director’s fees on SimplePay, a custom income item must be created, with the IR8A Category selected as ‘Director’s Fees’. This is to ensure that it is correctly reported on the director’s IR8A. To learn more about creating custom items, visit the following help page: