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Stock options granted and SG tax?

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t1c52002
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Stock options granted and SG tax?

Postby t1c52002 » Wed, 16 Jul 2014 2:48 pm

Hi everyone,

Was hoping that the collective experience of everyone here can help me with a question....I am starting a new role in SG with a company that is based in the US. Couple of things:

1. The company has not incorporated here in SG. The plan will it to be done after I start.
2. I am the only employee for them in Asia.
3. The focus of the business is China. There is no business at all in SG. I will be based here just because I have been here for a couple years as a PR.
4. American citizen.
5. Company is a start-up.
6. The company will issue me stock options on the day I start which incidentally I will not be in SG at that time.

Question is assuming that these options become worth something would I owe SG income tax on the difference between the strike and market value?

I have gotten conflicting information from folks with some saying if on the day of the grant I am not in SG then your gain on options will not be tax as income. Others have said that it will get tax because of my residency. I am leaning towards the latter as seems like a relatively easy loophole to be out of country on day of grant if that is all it takes to avoid SG income tax on options.

Any help would be much appreciated.

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sundaymorningstaple
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Postby sundaymorningstaple » Wed, 16 Jul 2014 3:33 pm

As far as I know, You will have to pay tax either in Singapore or in the USofA. Singapore will not tax you on your income if is earned outside of Singapore. Provided which, you DO pay taxes on it in the other country. Otherwise, you, as a PR would be liable to Singapore for the taxes.

t1c52002
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Postby t1c52002 » Wed, 16 Jul 2014 3:37 pm

sundaymorningstaple wrote:As far as I know, You will have to pay tax either in Singapore or in the USofA. Singapore will not tax you on your income if is earned outside of Singapore. Provided which, you DO pay taxes on it in the other country. Otherwise, you, as a PR would be liable to Singapore for the taxes.


Hi sundaymorningstaple, without question I will have to pay US tax on it and was expecting that.

Its just the option point as never had to deal with it that is throwing me off. I had RSU before and that was taxed as income by SG. Not sure if options are treated the same way.

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Postby PNGMK » Wed, 16 Jul 2014 4:52 pm

I've been through a slightly similar thing but with a UK company. I'm also a SPR.

1. CPF - you have to pay it. You'll need to register the US company but do all the admin locally. CPF are helpful in this regard even though it's not a common scenario (they thought I was registering a a CPF employer to pay CPF for a driver at first).

2. If you live here, you're tax resident even if your income is paid from outside Singapore (just as I was, my income was paid by the UK into a Singapore bank account). However if you travel a fair bit and as your company is not trading in Singapore you can claim a substantial discount on taxes as a 'Area Representative'. Search the IRAS website. You'll need - as a PR - to fill out a tax form. Don't forget there is a both reasonable 'overseas income' allowance for US citizens that you can use to reduce your US tax burden. I assume there is also a double taxation agreement?

3. Stock options. Basically I'm going out on a limb here but the IRAS is not likely to know about them unless you declare them. If you realize the options (on a cash basis and not paper) there there is a slot on the IRAS income tax form for you to fill in- otherwise I'd not worry - options can go negative or to zero as well so to declare them before they vest or until you realize their value at vesting seems a bit pointless. (And yes, I know the OP is meant to declare them as soon as they vest).

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zzm9980
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Re: Stock options granted and SG tax?

Postby zzm9980 » Thu, 17 Jul 2014 12:27 am

t1c52002 wrote:Hi everyone,

Was hoping that the collective experience of everyone here can help me with a question....I am starting a new role in SG with a company that is based in the US. Couple of things:

1. The company has not incorporated here in SG. The plan will it to be done after I start.
2. I am the only employee for them in Asia.
3. The focus of the business is China. There is no business at all in SG. I will be based here just because I have been here for a couple years as a PR.
4. American citizen.
5. Company is a start-up.
6. The company will issue me stock options on the day I start which incidentally I will not be in SG at that time.

Question is assuming that these options become worth something would I owe SG income tax on the difference between the strike and market value?

I have gotten conflicting information from folks with some saying if on the day of the grant I am not in SG then your gain on options will not be tax as income. Others have said that it will get tax because of my residency. I am leaning towards the latter as seems like a relatively easy loophole to be out of country on day of grant if that is all it takes to avoid SG income tax on options.

Any help would be much appreciated.


I'm an American who worked for a Singaporean subsidiary of an American company. I received RSUs, not options. As they vested, they were taxes as income at the vest price. I travelled often, and I can guarantee I was out of country on some grant and some vest days. They all were taxed, there was no "Fast boat to Batam" loophole.

Another *extremely important* thing to keep in mind is the "deemed exercised" rule when/if you terminate employment or residency in Singapore.

http://www.iras.gov.sg/irasHome/page04.aspx?id=8896

What do I do if there are unexercised stock options?
Under the Deemed Exercise Rule, a foreign employee is deemed to have obtained taxable gains from unexercised / restricted Employee Share Option Plan (ESOP) and unvested / restricted Employee Share Ownership Plans (ESOW) which he has at the time he ceases to work in Singapore with the company which granted him the ESOP or ESOW. This rule applies to ESOP and ESOW granted from 1 Jan 2003.

Employees affected

Foreigners (non citizens of Singapore).
Singapore Permanent Residents leaving Singapore permanently.
Singapore Permanent Residents posted to work overseas.


What types of ESOP and ESOW are affected?

They are:

Unexercised ESOP granted while an employee is employed in Singapore.
Restricted ESOP granted while employed in Singapore where the moratorium has not been lifted when the employee ceases employment with the company.
Shares granted while employed in Singapore under any ESOW with vesting imposed where the beneficial interest from the ownership of the shares has not yet been vested to the employee when he ceases employment with the company.
Restricted shares granted while employed in Singapore under any ESOW where the moratorium has not been lifted when the employee ceases employment with the company.


Theres a lot more on that page.


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