Official instructions of Finance Ministry on payment of taxes for Director not receiving any remuneration in the Company
On 11 June 2018 the Ministry of finance issued Opinion no. 011-00-1137/2018-04 stating that there is an obligation to pay personal income tax and mandatory social security taxes, in cases of concluding a contract on the rights and obligations of the director without being employed or being the founder of the company and not receiving any remuneration for his/her work.
In a situation when a director rejects to be paid according to the contract on the rights and obligations of the director, the base for calculating taxes represents compensation equivalent to adequate remuneration for his or her work reduced by 20% of lump sum deductible cost.
There are questions not answered in this opinion like what the adequate compensation is, what the basis for its determination is and when taxes should be calculated and paid.
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