Director fees earned by you in Singapore would not be subjected to the Central Provident Fund. The Central Provident Fund is a rather compulsory savings scheme designed to help provide a quality retirement, health care, and housing for the citizens and permanent residents of Singapore. Where one is offering employment and subsequently pays salaries to other employees, he or she is supposed to consider CPF upon such employment. However, the directors face different treatment on the same.
Director’s fees represent payment for services rendered by a director to a company and are usually payable in a lump sum upon the completion of his work or at the end of a financial year. In so far as the fee is not a wage or salary, CPF contribution rules do not apply thereto.
CPF contributions apply to salaries earned by employees, such as directors who are employed under a contract of service and receive a salary. CPF contributions in that case need to be made on the salary portion but not on the director fees, since those have been considered as one type of remuneration.
Differentiation needs to be made between a salary and director fees. Where there is a director who is also an employee of the company and is receiving a monthly salary, he has to have CPF contributions made for such a salary. In the case of a non-executive director, however-one who receives no emoluments from the firm other than director fees-no CPF contribution applies.
While there is no obligation to make CPF contributions on such director fees, the key point here is that such fees remain taxable as personal income.By One IBC, Directors need to declare them in their tax filings and are liable for prevailing income tax rates in Singapore.