Did you know that in terms of the 13th Schedule and 33rd Schedule of the Income Tax Act, director’s fees are taxable as employment income or business income depending on the relationship between the payer and the payee?

This week’s edition is aimed at clarifying the taxability of fees payable to directors.

  • Director’s fees subject to Pay As You Earn ( PAYE)

The definition of remuneration contained in the 13th Schedule 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.


The tax should be deducted using the PAYE tax tables which are normally availed to employers and obtainable from the Zimbabwe Revenue Authority (ZIMRA).

All employers are required to withhold PAYE and remit the amounts so withheld to the Commissioner General of ZIMRA on or before the 10th day of the following month after its deduction.

  • Director’s fees subject to withholding tax

Director’s fees are however not subject to PAYE if no other amount constituting remuneration is payable to the director by the paying corporate body.

The director’s fees payable to non-executive directors are subject to 20% withholding tax in terms of the 33rd Schedule of the Income Tax Act.

Non-executive director’s fees means any remuneration of a director paid by the corporate body of which he or she is a director and this includes:


(a) Amounts excluded for the purposes of employees’ tax and not qualifying as remuneration in terms of the 13th Schedule of the Income Tax Act or


(b) Any amounts from which employees’ tax has not been withheld in terms of the 13th Schedule of the Income Tax Act for any reason.

For example, individual B is employed by Company X and is a member of the board of Company Y. If individual B does not receive any other amounts regarded as remuneration from Company Y then the fees payable by the board of Company Y to individual B are subject to withholding tax.


This is a provisional tax withheld pending the submission of an income tax return at the end of the tax year and is credited against the Income Tax due on assessment.


Any payer or agent of the payer of fees is required to withhold and remit the tax to ZIMRA within 10 days of payment of the fees.

  • Value Added Tax (VAT)  implications on directors fees payable to Non-executive directors

In cases where a non-executive director earns or is entitled to a total amount of $60 000 or more in respect of fees, in a tax year, the person is required to register for VAT purposes and pay the tax as prescribed in the Value Added Tax Act (23:12).


  • Tax treatment applies to public, statutory corporations and private sector companies.

It should be stated that the taxation requirements of directors as highlighted above applies to directors employed by private, public and statutory corporations.

  • Penalties and interest charged for late remittances of tax

Our valued clients are hereby informed that penalties and interest is chargeable on late remittances of both PAYE and withholding tax. ZIMRA also carries out periodic audits in order to check whether the correct taxes are paid in full and on time.  Clients are encouraged to be compliant in order to avoid unnecessary inconveniences.