Hi Seniors,

I'm new executive director on a new sdn bhd company and need some advise on monthly director fee vs salary, for myself.
1. Which would be the best option to withdraw? What are the pros and cons. Please advise.
2. Will director fee has some restriction or difficulty for applying certain loans/credit card?
3. How to calculate the income tax/MTD if withdraw with monthly director fee?


Thank you very much !!

1) Director's fees is NOT subjected to KWSP deduction...
Payments that are not subject to EPF deductions are as follows:
https://www.nbc.com.my/blog/all-payments-fo...epf-deductions/
so you will lose out on that "Free" portion contributed by the company and its compounding effect over the years.
This % of KWSP contribution is tax free, but if they compensate that EPF contribution portion by giving the % of equivalent in terms of director's fee extras.....you will be taxed for the % of extra too.
2) read post# 2
https://forum.lowyat.net/topic/4052919/all
3) Read "Payment of Tax", Q6: Q : How to calculate the MTD for director's fees?
http://www.hasil.gov.my/bt_goindex.php?bt_...sequ=1&bt_lgv=2

This post has been edited by MUM: Aug 9 2019, 12:09 PM

If I remember correctly, director's remuneration is only via fees as by definition, directors are not staff of the company hence not eligible for a salary. Maybe a lawyer or a company secretary can shed more light on this.

This post has been edited by RWT: Aug 9 2019, 10:50 AM

A Primer on Directors’ Fees in Malaysia

Disclosure requirements --
Private company..........
Public company ..........
https://www.lh-ag.com/wp-content/uploads/20...in-Malaysia.pdf

From that reading, it seems a salary for directors is applicable as long as it's an executive director. Is my understanding correct?

while waiting for real educated people from this field to reply....
Maybe from page 11 onwards can shed some lights on this?
(too heavy texted reading for me...just be warned)

This post has been edited by MUM: Aug 9 2019, 11:25 AM


Attached File(s)
 director_fee_CA_2016.pdf ( 404.95k ) Number of downloads: 874

assuming the Sdn Bhd is all yours
take both, salary monthly and director fees end of year, both also you need pay personal tax same

salary is rather "rigid" not so flexible to change, pay fixed monthly PCB, KWSP ,etc attached to it.
benefit is get additional tax claim from employer's contribution, make it 19% to the max.


Director fee is flexible, so use it to adjust how much you want for maximal tax benefits.
company got more profit, you can take more fee, no profit pay less or even nil, upto you.
becos it is 'flexible" banks dont like it for loan taking consideration etc. they prefer see salary amount
also take director fee, no additional tax relief to your company in form of employer's KWSP portion.

So first estimate the tax relief you can claim, take salary amount that gives lower bracket, remainder income take as director fees

before company year end closing account , decide how much director fee to take
so that both company and personal tax the lowest.

Tips:if Company income BIG, add in spouse and family members to claim salary and fees, my advice is to add them now instead of waiting till income BIG then only add them.

Director can be as well as ordinary staff working in office and drawing a salary.

So a Director can get salary + Director Fee.

The difference:
Director Fee needs to be approved by shareholders during AGM resolution.
Shareholders can reject the Director Fee resolution, while salary won't face this issue.

For loan application,
Banks see salary as a more stable and "reliable" income as compared to Director Fee, as Director fee can be vary even none if company shareholders decide not to give.

1. There is no best option, both have its own pros and cons.

2. Generally, banks may prefer salary as compared to Director Fee, as explained in earlier post.

3. Similar to bonus calculation, there is online calculator, just key in the figure at appropriate column, you will have the MTD amount needs to be paid.

Thanks all seniors! That's help me much better now!!