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CA Final · Direct Tax Laws & International Taxation · Overview of Model Tax Conventions

Mr. Rao, an Indian resident, is a director of a Singapore company and receives director's fees for attending board meetings. Assume the treaty follows the OECD Model Article 16 on directors' fees. Which statement is correct?

Under OECD Model Article 16, directors' fees may be taxed in the State where the paying company is resident, here Singapore, irrespective of where the director performs services. Day-count or fixed-base tests are not relevant to this article.

  1. AFees are taxable only in India as his residence State
  2. BFees may be taxed in Singapore, the State of residence of the company paying them, regardless of where he performs the servicesCorrect
  3. CFees are taxable in Singapore only if he stays there over 183 days
  4. DFees are taxable in Singapore only if he has a fixed base there

Explanation

Article 16 allows the State of which the company is a resident to tax directors' fees and similar payments for membership of the board, irrespective of where the services are performed. The 183-day and fixed-base tests do not apply to this Article.

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