Director Fees vs Dividends vs Directors’ Renumeration

Criteria

Director Fees (Salary)

Dividends

Directors’ Remuneration (Salary + Bonus)

Eligibility

Payable only to directors.

Payable only to shareholders.

Payable only to directors.

Tax Treatment

Classified as personal income and taxed at individual income tax rates in Singapore.

Exempt from personal income tax due to Singapore’s one-tier corporate tax system.

Classified as personal income; both fixed salary and variable bonuses are subject to individual income tax rates.

Corporate Deduction

Deductible as a business expense, reducing the company’s taxable profit and overall corporate tax liability, provided they are reasonable and related to business operations.

Not deductible, as dividends are distributed from after-tax profits.

Deductible as a business expense, reducing the company’s taxable profit; includes both salary and any performance-related bonuses.

Payment Limitations

Can be paid out even if the company is making a loss.

Limited by the company’s current profit, retained earnings, and available cash; dividends cannot be paid out from loans.

Can be paid out even if the company is making a loss.

Timing of Payment

Must be paid within one year; otherwise, the amount is added back to the company’s tax return.

Must be paid when declared as due and payable, establishing a legal obligation for the company.

Salary is typically paid regularly (monthly/quarterly); bonuses may be paid periodically, such as annually or upon performance evaluations.

Distribution Basis

Not necessarily paid equally; amounts are typically based on each director’s role and contribution.

Distributed in proportion to each shareholder’s ownership stake in the company.

Not necessarily paid equally; amounts are typically based on individual role, performance, and contribution, making it flexible and merit-based.

CPF Liability

Not subject to CPF contributions.

Not subject to CPF contributions.

Subject to CPF contributions for Singapore citizens and permanent residents, impacting both company expenses and director’s net pay.

Approval and Payment Flexibility

Requires shareholder approval and is typically paid regularly as part of the director’s compensation agreement.

Requires directors’ recommendation followed by shareholder approval, with payments typically distributed at the end of the fiscal year, based on the company’s cash position.

Requires board approval; flexible, combining both regular salary and periodic bonuses that can be adjusted based on company performance and individual contribution.

Financial Impact on Company

Recorded as an expense, reducing net profit before tax.

Paid from after-tax profits, reducing retained earnings but not affecting net profit.

Recorded as an expense, reducing net profit before tax, with bonuses potentially fluctuating based on profitability and performance.

Documentation and Compliance

Formal approval in board minutes required; recorded as part of financial statements.

Declaration creates a binding obligation; reflected in the financial statements and affects retained earnings.

Formal board approval required, especially for bonuses, as they must be documented in financial statements and meet reasonableness standards to qualify as a deductible expense.

Ideal Scenario

Suitable when the company has high profit margins and could benefit from reducing taxable income, provided the directors’ effective personal tax rates are lower than the company’s effective corporate tax rate.

Preferable when the director is in a high personal tax bracket from other income sources, as dividends do not increase personal tax liability.

Suitable for rewarding directors based on performance, offering flexibility in combining fixed pay with variable bonuses, while allowing for corporate tax deduction on the total remuneration.

Summary

Ideal for steady compensation that reduces corporate taxable income, especially when individual tax rates are favorable.

Suitable for profit distribution when directors seek tax-free income, and when the company has sufficient retained earnings and positive cash flow.

Ideal for flexible compensation that can adjust based on company performance, aligning director incentives with business goals while optimizing for tax deductions.

标准

董事费（薪酬）

股息

董事薪酬（工资+奖金）

资格

仅支付给董事。

仅支付给股东。

仅支付给董事。

税务处理

归类为个人收入，按照新加坡个人所得税税率征税。

由于新加坡单层公司税制度，免征个人所得税。

归类为个人收入，固定工资和可变奖金均需缴纳个人所得税。

企业扣除

可作为业务费用扣除，从而减少公司应税利润和总体公司税负，前提是费用合理并与业务运营相关。

不可扣除，因为股息是从税后利润中分配的。

可作为业务费用扣除，减少公司应税利润，包括工资和任何与绩效相关的奖金。

支付限制

即使公司亏损也可以支付。

受公司当前利润、保留收益和可用现金的限制；股息不能从贷款中支付。

即使公司亏损也可以支付。

支付时间

必须在一年内支付，否则金额将被加回公司的税务申报中。

必须在宣告到期并应付时支付，从而确立公司法定义务。

工资通常定期支付（每月/每季度）；奖金可以定期支付，例如每年或根据绩效评估。

分配依据

不一定均等支付；金额通常基于每位董事的角色和贡献。

按照每位股东在公司的所有权比例分配。

不一定均等支付；金额通常基于个人角色、绩效和贡献，使其灵活且基于功绩。

CPF 责任

不需缴纳公积金（CPF）缴款。

不需缴纳公积金（CPF）缴款。

对于新加坡公民和永久居民需缴纳公积金（CPF），影响公司费用和董事净薪。

批准和支付灵活性

需要股东批准，通常作为董事薪酬协议的一部分定期支付。

需要董事的建议及股东的批准，支付通常在财年末分配，取决于公司的现金状况。

需要董事会批准；灵活结合了定期工资和定期奖金，奖金可以根据公司绩效和个人贡献进行调整。

对公司的财务影响

记录为费用，减少税前净利润。

从税后利润中支付，减少保留收益，但不影响净利润。

记录为费用，减少税前净利润，奖金可能根据盈利和绩效而波动。

文档和合规性

需要在董事会会议记录中正式批准；记录在财务报表中。

宣告后即形成法律义务；反映在财务报表中，并影响保留收益。

需要正式的董事会批准，特别是奖金，必须在财务报表中记录，并符合合理性标准才能作为可扣除的费用。

理想情景

适用于公司利润率较高且需要减少应税收入的情况，前提是董事的个人有效税率低于公司的公司有效税率。

当董事因其他收入来源处于高个人税率时更为合适，因为股息不会增加个人税负。

适用于根据绩效奖励董事，提供将固定工资与可变奖金相结合的灵活性，同时允许对总薪酬进行公司税扣除。

总结

适合稳定的薪酬，减少公司应税收入，特别是当个人税率有利时。

适合当董事希望获得免税收入且公司有足够的保留收益和良好的现金流时进行利润分配。

适合根据公司绩效调整的灵活薪酬，能够使董事的激励与公司目标保持一致，同时优化税收扣除。