DIRECTOR’S FEE

• The definition of remuneration contained in the 13th Schedule of the Income Tax Act
includes amounts such as salary, leave pay, allowances, wages, overtime pay, bonus,
commission, fees and benefits. Fees payable to or earned by the director are
considered part of remuneration and therefore subject to employees’ tax if paid to a
director of a company or paid to a chairman or member of any board of a statutory
corporation from which the individual also receives other amounts constituting
remuneration.
• Director’s fees are paid to both Executive and Non-Executive Directors
• Executive directors are taxed through the payroll under PAYE
• For non-executive directors, the fees are taxed at 20% withholding tax
• The due date for payment of WHT is on or before the 10th day from the date of
payment of the fees
• Finance Act Amendment No. 3 of 2019 exempts non-executive directors from 10%
WHT for lack of tax clearance certificate. The amendment further exempts the NED
fees from income tax computations on the 3rd schedule, paragraph 4(w).
• This means NED fees become a final tax, no need for filing a return unless the
director has other income apart from the fees
• The director should meet conditions of an independent contractor. If s/he receives
benefits and allowances over and above board fees, Zimra may bring taxation of fees
under PAYE as the amounts will be viewed as remuneration