Scenario 1: Remuneration received in the capacity as a board director
Receive director's remuneration/fees* in the capacity as a non-resident director of a company which is a tax resident in Singapore.
*If the non-resident director received gains from stock options/other share ownership plans (ESOP/ESOW), refer to Scenario 2
Employer's obligations
- Withhold tax at 24% (22% for income due and payable from 1 Jan 2016 to 31 Dec 2022) of director's remuneration;
- e-File via myTax Portal and pay the withholding tax by the 15th of the second month from the date of payment of the director's remuneration. Confirmation of Payment (CP) letter will be issued to the employer.
It does not matter where the board meeting was held or that the individual was not physically working in Singapore. Such payments are taxable regardless of the physical presence in Singapore.
Director's obligations
Filing of tax returns
The director does not need to file a tax return as the employer has withheld tax at source and e-filed the withholding tax.
If the director has received a tax return/tax bill and is only in receipt of director's remuneration, please contact us to review the tax return/tax bill sent and forward Confirmation of Payment (CP) letter on the tax remitted.
Scenario 2: Gains from exercise of stock options (ESOP) or vesting of stock awards (ESOW)
Receive gains from ESOP/ESOW in the capacity as a non-resident director of a company which is a tax resident in Singapore.
The employer must file the Form IR21A to report the gains from ESOP/ESOW within 30 days from the date of exercise, assignment, release or acquisition of the shares. Singpass holders can also submit the online Form IR21A.
The director will receive a tax bill on the amount of tax to pay.
Scenario 3: Remuneration received in the capacity as a board director and executive director
Receive director's remuneration in the capacity as a non-resident director and employment income as an executive director of a company which is a tax resident in Singapore.
The remuneration is as follows:
| Salary received as managing director | $ 5,000 per month |
|---|---|
| Remuneration received as board director | $10,000 approved on 3 Jun 2023 |
| $15,000 approved on 2 Dec 2023 |
Employer's obligations:
(a) Withhold tax
(i) Remuneration received as board director of $10,000 approved on 3 Jun 2023
- withhold and remit tax of $2,400 ($10,000 @ 24%) by e-filing the withholding tax by 15 Aug 2023 as the physical presence of the director in Singapore was less than 183 days from 1 Jan 2023 to 3 Jun 2023. Confirmation of Payment (CP) letter will be issued to the employer.
(ii) Remuneration received as board director of $15,000 approved on 2 Dec 2023
Whether tax needs to be withheld depends on the period of physical presence of the director.
Example 1 - Board director's physical presence in Singapore was less than 183 days in a calendar year when the director's remuneration was declared (i.e. 1 Jan to 2 Dec 2023)
- Withhold and remit tax of $3,600 ($15,000 @ 24%) by e-filing the withholding tax by 15 Feb 2024. Confirmation of Payment (CP) letter will be issued to the employer.
Example 2 - Board director's physical presence in Singapore is at least 183 days in a calendar year when the director's remuneration was declared (i.e. 1 Jan to 2 Dec 2023)
- No tax need to be withheld
(iii) Salary as managing director of $60,000 for year 2023
- Withholding tax is not applicable
(b) Prepare Form IR8A and seek tax clearance
- Prepare Form IR8A to report
- director's remuneration of $25,000 received in the capacity as a board director and
- salary of $60,000 received in the capacity as a managing director
- Give the Form IR8A to the employee by 1 March 2024 for their tax filing. For e-submission of Form IR8A, the 'S45 indicator' on the IR8A screen must be checked if tax has been withheld on the director's remuneration/fees
- Seek tax clearance to settle the income tax when the employee decides to cease employment as an executive director.
Director's obligations:
Example 1: physical presence in Singapore is less than 183 days in a calendar year (i.e. 1 Jan to 31 Dec 2023)
- Declare the employment income received in the capacity as a managing director in the tax return for the Year of Assessment (YA) 2024 if the employer is not under auto-inclusion scheme as follows:
Salary $60,000 ($5,000 x 12 months)
- Pay the tax upon receipt of the tax bill. Director does not need to report the director's remuneration received as a board director as the employer must account for the withholding tax on the payment made to him as a non-resident.
Example 2: physical presence in Singapore is at least 183 days in a calendar year (i.e. 1 Jan to 31 Dec 2023)
- Declare the employment income in the tax return for the Year of Assessment (YA) 2024 if the employer is not under auto-inclusion scheme as follows:
Salary $60,000 ($5,000 x 12 months)
Director's fees
$25,000
- Furnish the following information to IRAS
- tax reference number
- a schedule of physical presence to show that the period of stay in Singapore is at least 183 days in the calendar year 2023 and
- copies of the Confirmation of Payment (CP) letter on the withholding tax
- Pay the tax upon receipt of the tax bill. Ensure there is no outstanding tax when you decide to cease employment with your employer.
Obtaining a tax return
If the director has not received the tax return by 15 Mar, he can contact us.
FAQs
#1 Must a non-resident director file an income tax return?
No. Since the employer has accounted for withholding tax, the non-resident director would only need to file an income tax return if he/she has other sources of income.
#2 Must the employer file Form IR21 and apply the deem exercise rule on the non-resident director's unexercised stock options when he resigns from his directorship?
No. Instead the employer must file a Form IR21A to report the gains from ESOP/ESOW within 30 days from the date of exercise, assignment, release or acquisition of the shares.