Scenario 1: Remuneration Received in the Capacity as a Board Director

Receive director's remuneration (excluding gains from stock option/other share ownership plans (ESOP/ESOW) in the capacity as a  non-resident director  of a company which is a tax resident in Singapore.

Employer's Obligations

  1. Withhold tax at 22% (20% for income due and payable prior to 1 Jan 2016) of director's remuneration;
  2. File Form IR37 ; 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.

 

Filing of tax returns

The director does not need to file a tax return as the employer has withheld tax at source and filed Form IR37.

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.

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 as Managing Director

$ 5,000 per month

Director's remuneration as board director

$10,000 approved on 1 Jun 2015

 

$15,000 approved on 30 Nov 2015

 

Employer's obligations:

(a) Withhold tax

(i) Director's remuneration as Board Director of $10,000 approved on 1 Jun 2015

  • withhold and remit tax of $2,000 ($10,000 @ 20%) together with the Form IR37 by 15 Aug  2015 as the physical presence in Singapore is less than 183 days from 1 Jan 2015 to 1 Jun 2015. Confirmation of Payment (CP) letter will be issued to the employer.


(ii) Director's remuneration as Board Director of $15,000 approved on 30 Nov 2015

Whether tax needs to be withheld depends on the period of physical presence of the director.

Example 1 - physical presence in Singapore is less than 183 days in a calendar year when the director's remuneration is declared (i.e. 1 Jan to 30 Nov 2015)

  • Withhold and remit tax of $3,000 ($15,000 @ 20%) together with the Form IR37 by 15 Jan 2016. Confirmation of Payment (CP)  letter will be issued to the employer.

Example 2 - physical presence in Singapore is at least 183 days in a calendar year when the director's remuneration is declared (i.e. 1 Jan to 30 Nov 2015)

  • No tax need to be withheld

 

(iii)    Salary as Managing Director of $60,000 for year 2015

  • Withholding tax is not applicable

 

(b) Prepare Form IR8A and seek tax clearance

  • Prepare separate Form IR8As to report
    • director's remuneration of $25,000 received in the capacity as a Board Director
    • salary of $60,000 received in the capacity as a managing director
  • Give the copies of the Form IR8As to the employee by 1 March 2016 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.

Employee's obligations:

1. Declare the employment income received in the capacity as a managing director in the tax return for the Year of Assessment (YA) 2016 if the employer is not under auto-inclusion scheme as follows:

Salary

$60,000 ($5,000 x 12 months)

2. Pay the tax upon receipt of the tax bill. Employee does not need to report the Director's remuneration received as a Board Director as the payer must account for the withholding tax on the payment made to him as a non-resident.

 

1. Declare the employment income received in the capacity as a managing director in the tax return for the YA 2016 if the employer is not under auto-inclusion scheme as follows:

Salary

$60,000 ($5,000 x 12 months)

Director's fees

$25,000

2. Enter the amount of withholding tax $2,000 in the field "Tax deducted at source". 

3. Furnish a schedule of physical presence to show that the period of stay is at least 183 days in the calendar year 2015.

4. 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 to request for it.

  • #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.

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