Director's fees and EPF

The situation

Whether EPF applies depends on whether the director is also an employee receiving wages. Director fees alone are often not wages for EPF; check KWSP rules.

The law

• Sec 43, Employees Provident Fund Act 1991: Employer and employee contributions paid by the 15th of the next month
• Sec 107, Income Tax Act 1967 and Income Tax (Deduction from Remuneration) Rules 1994: Employer deducts monthly tax (PCB / MTD) and pays it by the 15th of the next month

What it means for you

PCB generally applies to director fees as employment income. Executive directors with salaries usually fall under EPF. Get the classification right to avoid back payments.

What to do

1. Separate fees from salary.
2. Check KWSP guidance.
3. Apply PCB as required.
4. Document the decision.

Related

• Employee leaving Malaysia
• EPF rate above RM5,000 wages
• EPF for foreign workers
• PCB on bonuses
• EIS age limits
• Payroll payment due date