In Singapore’s robust regulatory landscape of 2026, understanding how director fees are taxed is critical for both the company and the individual. While these payments are a common way to reward board-level oversight, they are treated differently from standard salaries—especially regarding tax timing and Central Provident Fund (CPF) contributions.
At Hallmark Corporate Services, we help businesses optimize their remuneration strategies while ensuring total compliance with the Inland Revenue Authority of Singapore (IRAS). Here is everything you need to know about the tax treatment of director fees.
1. Are Director Fees Taxable?
Yes. In Singapore, all director fees received in the capacity of a board member are considered employment income and are subject to income tax. This applies regardless of whether the director is physically present in Singapore or if the board meetings are held remotely.
2. Tax Residency and Rates
The specific tax rate applied depends heavily on the director’s tax residency status:
- Resident Directors: Directors who are Singapore Citizens, Permanent Residents, or foreigners who stayed/worked in Singapore for at least 183 days in a calendar year. They are taxed at progressive resident rates, ranging from 0% to 24% (as per 2026 brackets).
- Non-Resident Directors: These are directors who spend less than 183 days in Singapore annually. Their fees are subject to a flat withholding tax rate of 24%. Unlike employment income for non-resident employees (often 15%), director fees do not receive this concession unless specifically provided for under a Double Taxation Agreement (DTA).
3. The “Entitlement” Rule: When is Tax Due?
One of the most common mistakes founders make is misjudging the timing of tax liability. Director fees are taxable in the Year of Assessment (YA) corresponding to when the director became legally entitled to the fees.
- Fees Approved in Arrears: If fees for work done in 2025 are approved at an Annual General Meeting (AGM) in April 2026, the income is taxable in YA 2027 (the year after the entitlement arose).
- Fees Approved in Advance: If shareholders approve fees for 2026 during an AGM in 2025, the director is taxed as and when the services are rendered throughout 2026.
4. Withholding Tax Obligations for the Company
If your company pays fees to a non-resident director, you have a legal obligation to withhold tax at source.
- Rate: 24%.
- Filing: The company must file the withholding tax (Form IR37) and remit the payment to IRAS by the 15th of the second month from the date of payment or the date the fee was approved, whichever is earlier.
5. CPF Contributions and Deductibility
- CPF: Unlike salaries, director fees are generally exempt from CPF contributions because they are not considered “wages” under a contract of service. This makes them a cash-flow efficient way for companies to remunerate resident directors.
- Tax Deductibility: For the company, director fees are tax-deductible expenses, provided they are “wholly and exclusively” incurred in the production of income. This helps lower the company’s overall Corporate Income Tax (CIT) liability.
Conclusion: Strategic Planning for 2026
Choosing between a director’s salary, fees, or dividends requires a careful balance of tax efficiency and compliance. While fees offer CPF savings and company tax deductions, the flat 24% withholding for non-residents can be a significant cost.
At Hallmark Corporate Services, we specialize in corporate tax filing, withholding tax management, and remuneration planning. We ensure your board is compensated fairly and legally, so you can focus on driving your company’s vision forward.
Is your company compliant with the latest 2026 withholding tax deadlines? Would you like a consultation?