What are the tax implications of NED (Non – Executive Directors) fees?

In the past, there have often been debates on the interpretation of the tax implications for Non – Executive Directors. However,  in February 2017, SARS recently published the Binding Rulings onto their website and this has finally brought clarity on the tax implications of NED (Non – Executive Directors) fees.

The Binding Rulings have clarified both the Income Tax and Value- Added Tax Acts, by stating that Non- Executive Directors will only have to register for VAT if they meet the requirements for VAT registration and are able to claim for expenses if it was incurred by producing income.

The VAT Binding Rulings can be found here and will apply from 1 June 2017 and the Binding Ruling also state that employee’s income tax applies and cannot be withheld.  Remuneration paid to Non- Executive Directors can be found here and also will apply from 1 June 2017.

If you require any assistance in understanding the impact of these new rules on your non-executive directors fees, please feel free to contact us.

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