Withholding tax - Non-resident director

For tax purposes, a non-resident director is:

• a member of the board of directors (board director) of a company incorporated in Singapore and
•  physically present in Singapore for less than 183 days in the year preceding the Year of Assessment.

If payment of income is made to the individual in his capacity as a non-resident Director sitting on the board of directors of a company incorporated in Singapore, the employer is required to file Form IR37 and withhold tax at the non-resident rate of 20% from the Year of Assessment 2005. It does not matter where the board meeting is held or that he was physically not working in Singapore. For tax purposes, the Board Director will be treated as a non-resident if he is physically present in S'pore for less than 183 days in a calendar year.

Executive director

For tax purposes, an executive director :

• holds the job title of director e.g. marketing director or managing director and
• is involved in the daily running of the business operations

 If payment of income is made to him as an executive director exercising an employment in S'pore, he has to report his employment income in an annual tax form. The income would be exempt from tax for employment exercised for not more than 60 days in the calendar year. If the employment is for more than 60 days but less than 183 days in a calendar year, he would be regarded as a non-resident for tax purposes and his income would be assessed at a flat rate of 15% or resident rate, whichever is higher. The executive Director will be regarded as a tax resident if his employment period / physical presence meets at least 183 days in a calendar year. As a tax resident, his income will be taxed at graduated rates and personal reliefs granted to him.

For further information on withholding tax issues, contact as via blog or at bernard@grobartigerhafen.org