Stock Options Incentive Schemes - Company Stock Options Scheme and Qualified Employees Stock Options Scheme

Formerly, the full ESOP gains would be taxed in Singapore if the ESOP is exercised 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 would be taxed in Singapore to the extent that there is a nexus between ESOP and the employment exercised in Singapore.

Please see Tables 1 and 2 below.

Gains from employee stock options (ESOP) are assessed to tax as income in the year in which the options are exercised. 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 ESOP on the date the selling restriction is lifted and the exercise price.

To encourage companies to offer remuneration packages that better link the interests of management and employees with the performance of the company, and hence strengthen the entrepreneurial culture in Singapore, the Government has put in place several incentive schemes.

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