Stock Options and Awards

Formerly, the gains from Employee Share Option (ESOP) and Employee Share Ownership (ESOW) plans would be taxed in Singapore if the ESOP/ESOW is exercised/vested while an individual is physically present or exercising employment in Singapore. This is regardless of whether the ESOP is granted when the individual is exercising an employment in Singapore.

With the budget changes in 2002, any gains derived from any ESOP/ESOW would be taxed in Singapore to the extent that there is a nexus between ESOP/ESOW and the employment exercised in Singapore. 

Please see Tables 1 and 2 below. 


Table 1: ESOP/ESOW Plan granted while an individual is exercising employment in Singapore 
Granted before 1 Jan 2003 The gains from any ESOP/ESOW plans are taxable in Singapore.This is regardless of where you exercise/ vest the ESOP/ESOW plans, as the gains will be taxed to the extent that they are connected with Singapore employment.

Table 2: ESOP/ESOW Plans granted while an individual is not exercising employment in Singapore 
Exercised before 1 Jan 2002  The gains from any ESOP/ESOW plans are taxable in Singapore if the
ESOP/ESOW plans are exercised/ vested while you are physically present in Singapore or holding an employment in Singapore.
 Exercised on or after 1 Jan 2002   The gains from any ESOP/ESOW plans are taxable in Singapore if the 
ESOP/ESOW plans are exercised/ vested while you are physically present in Singapore or holding an employment in Singapore.

 

Gains from ESOW plan with no vesting imposed are taxable in the year when the shares are granted. Gains from ESOP are not taxable at the time it was granted but at the time the options are exercised. The taxable value is the difference between the open market value of the shares at the time the stock option is exercised and the price paid for the shares. For restricted ESOPs (i.e. selling restriction imposed), the gains are accrued on the date the selling restriction is lifted. The taxable gains will be determined based on the difference between the open market price of the shares on the date the selling restriction on the ESOP is lifted and the exercise price.

Income tax exemption will be granted under the ERIS (All Corporations) for up to $1 million of stock option or share award gains arising from the exercise of the employee's options over a 10-year period, which begins from the year the employee first exercises his options. Of the $1 million worth of stock option gains, the first $2000 annual gains will be fully exempt, while 25% of the remaining annual gains will be exempt. 

Equity Remuneration Incentive Scheme (ERIS) (All Corporations)
Income tax exemption will be granted under the ERIS (All Corporations) for up to $1 million of stock option or share award gains arising from the exercise of the employee's options over a 10-year period, which begins from the year the employee first exercises his options. Of the $1 million worth of stock option gains, the first $2000 annual gains will be fully exempt, while 25% of the remaining annual gains will be exempt.

ERIS (SMEs)
Income tax exemption will be granted under the ERIS (SMEs) on 50% of up to $10 million in stock option or share award gains arising from the exercise of the employee's options over a 10-year period, which begins from the year the employee first exercises the options. 

ERIS (Start-Ups)
 Income tax exemption will be granted under the ERIS (Start-Ups) on 75% of up to $10 million in stock option or share award gains arising from the exercise of the employee's options over a 10-year period, which begins from the year the employee first exercises his options.

More details on these schemes and their qualifying conditions can be found on IRAS's website www.iras.gov.sg



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Last Updated on February 13, 2017
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