§ 13I — Exemption of tax on gains or profits from equity remuneration incentive scheme

13I.—(1) Where a qualifying employee derives any gains or profits in any year of assessment, after the expiry of the minimum holding period, from any stock option granted during the period from 1 April 2001 to 31 December 2013 (both dates inclusive), or any right or benefit under any share acquisition scheme (other than a stock option scheme) granted during the period from 1 January 2002 to 31 December 2013 (both dates inclusive), to acquire shares in any qualifying company or in its holding company under a share acquisition scheme which satisfies the relevant percentage requirement, there is, subject to this section and section 13H(6) to (9), exempt from tax —(a)

the first $2,000 of such gains or profits in that year of assessment as determined under subsection (2); and

(b)

25% of any amount of such gains or profits in that year of assessment exceeding $2,000 as determined under subsection (2).

(2) The amount of gains or profits referred to in subsection (1) is —(a)

where the price to be paid for the shares under the right or benefit is equal to or exceeds the market value or, if it is not possible to determine such value, the net asset value of the shares at the time of the grant of the right or benefit, the amount as determined under section 10(6); or

(b)

where the price to be paid for the shares under the right or benefit is at a discount to the market value or, if it is not possible to determine such value, the net asset value of the shares at the time of the grant of the right or benefit, the amount as determined under section 10(6) less the amount of the discount.

(3) The exemption under this section does not apply to any amount of gains or profits to which section 10(6) applies —(a)

to the extent that the amount, when aggregated with the amount of such gains or profits previously derived by the qualifying employee and which qualifies for exemption under this section, exceeds $1 million;

(b)

which is derived by the qualifying employee on or after 1 January of the 10th year following the year in which he or she first derived such gains or profits which qualified for exemption under this section; or

(c)

which is derived by the qualifying employee for the release of his or her right or benefit to acquire shares in any qualifying company or in its holding company by reason of his or her resignation or termination of his or her employment with the qualifying company due to his or her misconduct.

(3A) Despite anything in this section, the exemption under this section does not apply to any gains or profits derived by a qualifying employee on or after 1 January 2024.

(4) The Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.

(5) In this section, unless the context otherwise requires —[Deleted by Act 33 of 2022 wef 04/11/2022]

“minimum holding period” has the meaning given by section 13H;

“part‑time employee” means an employee of a company who is committed to work —(a)

where the time of grant is before 1 January 2010, for not more than 30 hours per week (including any time the employee would be required to work but for injury, any official leave or such other similar events) for the company; or

(b)

where the time of grant is on or after 1 January 2010, for not more than the number of hours per week referred to in section 66A(1) of the Employment Act 1968 (including any time the employee would be required to work but for injury, any official leave or such other similar events) for the company;

“qualifying company” means a company incorporated or registered under the Companies Act 1967 which, at the time of the grant to its employees of any right or benefit to acquire its shares or that of its holding company, carries on business in Singapore;

“qualifying employee” means an employee of a qualifying company who, at the time of the grant to him or her of any right or benefit to acquire the shares of the company or the shares of its holding company (as the case may be) does not beneficially own, directly or indirectly, voting shares that confer the right to exercise or control the exercise of not less than 25% of the voting power in the qualifying company which grants the right or benefit to acquire its shares;

“relevant percentage requirement” —(a)

in relation to any right or benefit under a share acquisition scheme to acquire the shares of a qualifying company or its holding company granted before 16 February 2008, means in the aggregate at least 50% of the employees of the qualifying company are offered during any calendar year any rights or benefits to acquire shares in the qualifying company or in its holding company under that scheme, as ascertained in accordance with the specified formula; or

(b)

in relation to any right or benefit under a share acquisition scheme to acquire the shares of a qualifying company or its holding company granted on or after 16 February 2008, means in the aggregate at least 25% of the employees of the qualifying company are offered during any calendar year any rights or benefits to acquire shares in the qualifying company or in its holding company under that scheme, as ascertained in accordance with the specified formula;

“share acquisition scheme” has the meaning given by section 13H;

“shares” includes stocks but does not include redeemable or convertible shares or shares of a preferential nature;

“specified formula” means the formula

where A

is the aggregate number of employees of the qualifying company who are offered during a calendar year any right or benefit to acquire shares in the qualifying company or in its holding company under any share acquisition scheme in respect of which the qualifying company has opted under section 13H(6) for tax exemption under this section instead of section 13H to apply, and who are employees of that qualifying company at the time of such offer;

B

is the number of employees of the qualifying company on the last day of that calendar year;

C

is the number of part‑time employees (other than non‑executive directors) on the last day of that calendar year where any right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where any right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year;

D

is the number of full‑time employees with less than one year’s service (other than non‑executive directors) on the last day of that calendar year where any right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where any right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year; and

E

is the number of employees engaged on contracts not exceeding 2 years (other than non‑executive directors) on the last day of that calendar year where any right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where any right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year.

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—(1) Where a qualifying employee derives any gains or profits in any year of assessment, after the expiry of the minimum holding period, from any stock option granted during the period from 1 April 2001 to 31 December 2013 (both dates inclusive), or any right or benefit under any share acquisition scheme (other than a stock option scheme) granted during the period from 1 January 2002 to 31 December 2013 (both dates inclusive), to acquire shares in any qualifying company or in its holding company under a share acquisition scheme which satisfies the relevant percentage requirement, there is, subject to this section and section 13H(6) to (9), exempt from tax —(a)

the first $2,000 of such gains or profits in that year of assessment as determined under subsection (2); and

(b)

25% of any amount of such gains or profits in that year of assessment exceeding $2,000 as determined under subsection (2).

(2) The amount of gains or profits referred to in subsection (1) is —(a)

where the price to be paid for the shares under the right or benefit is equal to or exceeds the market value or, if it is not possible to determine such value, the net asset value of the shares at the time of the grant of the right or benefit, the amount as determined under section 10(6); or

(b)

where the price to be paid for the shares under the right or benefit is at a discount to the market value or, if it is not possible to determine such value, the net asset value of the shares at the time of the grant of the right or benefit, the amount as determined under section 10(6) less the amount of the discount.

(3) The exemption under this section does not apply to any amount of gains or profits to which section 10(6) applies —(a)

to the extent that the amount, when aggregated with the amount of such gains or profits previously derived by the qualifying employee and which qualifies for exemption under this section, exceeds $1 million;

(b)

which is derived by the qualifying employee on or after 1 January of the 10th year following the year in which he or she first derived such gains or profits which qualified for exemption under this section; or

(c)

which is derived by the qualifying employee for the release of his or her right or benefit to acquire shares in any qualifying company or in its holding company by reason of his or her resignation or termination of his or her employment with the qualifying company due to his or her misconduct.

(3A) Despite anything in this section, the exemption under this section does not apply to any gains or profits derived by a qualifying employee on or after 1 January 2024.

(4) The Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.

(5) In this section, unless the context otherwise requires —[Deleted by Act 33 of 2022 wef 04/11/2022]

“minimum holding period” has the meaning given by section 13H;

“part‑time employee” means an employee of a company who is committed to work —(a)

where the time of grant is before 1 January 2010, for not more than 30 hours per week (including any time the employee would be required to work but for injury, any official leave or such other similar events) for the company; or

(b)

where the time of grant is on or after 1 January 2010, for not more than the number of hours per week referred to in section 66A(1) of the Employment Act 1968 (including any time the employee would be required to work but for injury, any official leave or such other similar events) for the company;

“qualifying company” means a company incorporated or registered under the Companies Act 1967 which, at the time of the grant to its employees of any right or benefit to acquire its shares or that of its holding company, carries on business in Singapore;

“qualifying employee” means an employee of a qualifying company who, at the time of the grant to him or her of any right or benefit to acquire the shares of the company or the shares of its holding company (as the case may be) does not beneficially own, directly or indirectly, voting shares that confer the right to exercise or control the exercise of not less than 25% of the voting power in the qualifying company which grants the right or benefit to acquire its shares;

“relevant percentage requirement” —(a)

in relation to any right or benefit under a share acquisition scheme to acquire the shares of a qualifying company or its holding company granted before 16 February 2008, means in the aggregate at least 50% of the employees of the qualifying company are offered during any calendar year any rights or benefits to acquire shares in the qualifying company or in its holding company under that scheme, as ascertained in accordance with the specified formula; or

(b)

in relation to any right or benefit under a share acquisition scheme to acquire the shares of a qualifying company or its holding company granted on or after 16 February 2008, means in the aggregate at least 25% of the employees of the qualifying company are offered during any calendar year any rights or benefits to acquire shares in the qualifying company or in its holding company under that scheme, as ascertained in accordance with the specified formula;

“share acquisition scheme” has the meaning given by section 13H;

“shares” includes stocks but does not include redeemable or convertible shares or shares of a preferential nature;

“specified formula” means the formula

where A

is the aggregate number of employees of the qualifying company who are offered during a calendar year any right or benefit to acquire shares in the qualifying company or in its holding company under any share acquisition scheme in respect of which the qualifying company has opted under section 13H(6) for tax exemption under this section instead of section 13H to apply, and who are employees of that qualifying company at the time of such offer;

B

is the number of employees of the qualifying company on the last day of that calendar year;

C

is the number of part‑time employees (other than non‑executive directors) on the last day of that calendar year where any right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where any right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year;

D

is the number of full‑time employees with less than one year’s service (other than non‑executive directors) on the last day of that calendar year where any right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where any right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year; and

E

is the number of employees engaged on contracts not exceeding 2 years (other than non‑executive directors) on the last day of that calendar year where any right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where any right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year.

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