§ 14M — Deduction for shares transferred by special purpose vehicle under employee equity‑based remuneration scheme

14M.—(1) Where —(a)

a special purpose vehicle has acquired treasury shares or previously issued shares in a company and, in the basis period for any year of assessment between the year of assessment 2012 and the year of assessment 2025 (both years inclusive), transfers those shares to any person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in the company; and[Act 25 of 2025 wef 08/12/2025]

(b)

payment by the company for the shares transferred to the person has become due and payable,

then the company is allowed a deduction for the relevant year of assessment of an amount referred to in subsection (2).

(2) The amount of deduction under subsection (1) is —(a)

where the transferred shares are previously issued shares, the lower of the following:(i)

the amount paid or payable by the company for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(ii)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares; or

(b)

where the transferred shares are treasury shares, either —(i)

the lowest of the following:(A)

the amount paid or payable by the company to the special purpose vehicle for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(B)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares to the extent the amount so paid or payable has not been deducted from the amount paid or payable by the special purpose vehicle to the company for those shares;

(C)

the cost to the company of acquiring the shares, less any amount paid or payable by the person for the shares; or

(ii)

where the amounts referred to in sub‑paragraph (i)(A) and (B) are both nil, the cost to the company of acquiring the shares less any amount paid or payable by the person for the shares.

(2A) Where —(a)

a special purpose vehicle has acquired treasury shares or previously issued shares in a company and, in the basis period for the year of assessment 2026 or any subsequent year of assessment, transfers those shares to any person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in the company; and

(b)

payment by the company for the shares transferred to the person has become due and payable,

then the company is allowed a deduction for the relevant year of assessment of an amount referred to in subsection (2B).

[Act 25 of 2025 wef 08/12/2025]

(2B) The amount of deduction under subsection (2A) is —(a)

where the transferred shares are previously issued shares, the lower of the following:(i)

the amount paid or payable by the company for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(ii)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares; or

(b)

where the transferred shares are treasury shares, the cost to the company of acquiring the shares, less any amount paid or payable by the person for the shares.[Act 25 of 2025 wef 08/12/2025]

(3) For the purposes of subsections (2)(a)(ii) and (b)(i)(B) and (2B)(a)(ii), the cost to the special purpose vehicle of acquiring the transferred shares is determined by any of the methods referred to in subsection (4), being (if the company has previously been allowed a deduction under this section for a transfer of shares by the special purpose vehicle) the method that is consistently adopted by the special purpose vehicle when ascertaining its cost of acquiring transferred shares under this section.[Act 25 of 2025 wef 08/12/2025]

(4) The methods referred to in subsection (3) are as follows:(a)

on the basis that the company’s shares acquired by the special purpose vehicle at an earlier point in time are deemed to be transferred first;

(b)

on the basis of the formula

where A

is the number of the transferred shares;

B

is the total number of the company’s shares held by the special purpose vehicle immediately before the transfer; and

C

is the total cost to the special purpose vehicle of acquiring the company’s shares held by it immediately before the transfer;

(c)

on the basis of the aggregate cost of all of the company’s shares transferred by the special purpose vehicle under subsection (1) or (2A) (as the case may be) within every regular interval in the basis period during which the transfer in question occurred, where the cost of all shares so transferred within a regular interval is ascertained by the formula

where D

is the total number of the company’s shares transferred by the special purpose vehicle under subsection (1) or (2A) (as the case may be) within that interval;

E

is the total number of the company’s shares held by the special purpose vehicle at the end of the period equal in length to the regular interval immediately preceding that interval;

F

is the total number of the company’s shares acquired by the special purpose vehicle within that interval;

G

is the total cost to the special purpose vehicle of acquiring the company’s shares held by it at the end of the period equal in length to the regular interval immediately preceding that interval; and

H

is the total cost to the special purpose vehicle of acquiring the company’s shares within that interval.

[Act 25 of 2025 wef 08/12/2025]

(5) For the purpose of subsections (2)(b)(i)(C) and (ii) and (2B)(b), the cost to the company of acquiring the transferred shares is determined by any of the methods referred to in section 14L(4) as modified in accordance with subsection (6), being (if the company has previously been allowed a deduction under this section) the method that is consistently adopted by the company when ascertaining its cost of acquiring transferred shares under this section.[Act 25 of 2025 wef 08/12/2025]

(6) The methods referred to in section 14L(4) apply for the purposes of subsection (5) as if a reference to the transfer under section 14L were a reference to the transfer of the treasury shares by the company to the special purpose vehicle.

(7) Where —(a)

a special purpose vehicle has acquired treasury shares or previously issued shares in the holding company of another company (called in this section subsidiary X) and, in the basis period for any year of assessment between the year of assessment 2012 and the year of assessment 2025 (both years inclusive), transfers those shares to a person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in subsidiary X; and[Act 25 of 2025 wef 08/12/2025]

(b)

payment by subsidiary X for the shares transferred to the person has become due and payable,[Act 25 of 2025 wef 08/12/2025]

then subsidiary X is allowed a deduction for the relevant year of assessment of an amount referred to in subsection (8).

[Act 25 of 2025 wef 08/12/2025]

(8) The amount of deduction under subsection (7) is —(a)

where the transferred shares are previously issued shares, the lower of the following:(i)

the amount paid or payable by subsidiary X for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;[Act 25 of 2025 wef 08/12/2025]

(ii)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares; or

(b)

where the transferred shares are treasury shares, either —(i)

the lowest of the following:(A)

the amount paid or payable by subsidiary X for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;[Act 25 of 2025 wef 08/12/2025]

(B)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares to the extent the amount so paid or payable has not been deducted from the amount paid or payable by the special purpose vehicle to the holding company for those shares;

(C)

the cost to the holding company of acquiring the shares, as determined in accordance with section 14L(8A), less any amount paid or payable by the person for the shares; or

(ii)

where the amount referred to in sub‑paragraph (i)(B) is nil, the lower of the amounts referred to in sub‑paragraph (i)(A) and (C).

(8A) Where —(a)

a special purpose vehicle has acquired treasury shares or previously issued shares in the holding company of another company (called in this section subsidiary Y) and, in the basis period for the year of assessment 2026 or any subsequent year of assessment, transfers those shares to a person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in subsidiary Y; and

(b)

payment by subsidiary Y for the shares transferred to the person has become due and payable,

then subsidiary Y is allowed a deduction for the relevant year of assessment of an amount mentioned in subsection (8B).

[Act 25 of 2025 wef 08/12/2025]

(8B) The amount of deduction under subsection (8A) is —(a)

where the transferred shares are previously issued shares, the lower of the following:(i)

the amount paid or payable by subsidiary Y for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(ii)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares; or

(b)

where the transferred shares are treasury shares, the lower of the following:(i)

the amount paid or payable by subsidiary Y for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(ii)

the cost to the holding company of acquiring the shares, as determined in accordance with section 14L(8A), less any amount paid or payable by the person for the shares.[Act 25 of 2025 wef 08/12/2025]

(9) For the purpose of subsections (8)(a)(ii) and (b)(i)(B) and (8B)(a)(ii), the cost to the special purpose vehicle of acquiring the transferred shares is determined by any of the methods referred to in subsection (4) as modified in accordance with subsection (10), being (if subsidiary X or subsidiary Y (as the case may be) has previously been allowed a deduction under this section for a transfer of shares by the special purpose vehicle) the method that is consistently adopted by the special purpose vehicle when ascertaining its cost of acquiring shares under this section.[Act 25 of 2025 wef 08/12/2025]

(10) The methods referred to in subsection (4) apply for the purposes of subsection (9) as if —(a)

a reference to the company is a reference to the holding company;[Act 25 of 2025 wef 08/12/2025]

(b)

a reference to subsection (1) is a reference to subsection (7); and[Act 25 of 2025 wef 08/12/2025]

(c)

a reference to subsection (2A) is a reference to subsection (8A).[Act 25 of 2025 wef 08/12/2025]

(11) For the purposes of this section, shares are transferred to a person when both the legal and beneficial interests in the shares are so transferred.

(12) No deduction is allowed to a company under this section if a deduction has already been allowed to the company under any other provision of this Act in respect of the transferred shares.

(13) In this section —“group of companies” means 2 or more companies each of which is either a holding company or subsidiary of the other or any of the others;

[Deleted by Act 33 of 2022 wef 04/11/2022]

“previously issued shares”, in relation to a company, means shares previously issued by the company and acquired by the special purpose vehicle —(a)

on a stock exchange in Singapore or elsewhere; or

(b)

from a person other than the company which issued the shares;

“regular interval”, in relation to a basis period, means one of a number of equal periods within the basis period —(a)

where the aggregate of all of those equal periods is equal to the basis period; and

(b)

where the duration of each equal period —(i)

in a case where the company, subsidiary X or subsidiary Y has previously been allowed a deduction under this section for a transfer of shares by the special purpose vehicle, is the one previously adopted by the special purpose vehicle for the purpose of this section; or[Act 25 of 2025 wef 08/12/2025]

(ii)

in any other case, is any duration adopted by the special purpose vehicle for the purpose of this section;

“relevant year of assessment” means the year of assessment which relates to the basis period in which the later of the following occurs:(a)

the transfer of the shares under subsection (1), (2A), (7) or (8A) (as the case may be) to the person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in the company, subsidiary X or subsidiary Y, as the case may be;[Act 25 of 2025 wef 08/12/2025]

(b)

the payment by the company, subsidiary X or subsidiary Y (as the case may be) for the shares so transferred becomes due and payable;[Act 25 of 2025 wef 08/12/2025]

“special purpose vehicle” means a trustee of a trust (when acting in such capacity) that is set up solely for the administration of a stock option scheme or share award scheme under which —(a)

in the case of subsection (1) or (2A), either —(i)

shares in the company referred to in that subsection are to be used for the remuneration of a person by reason of any office or employment held by that person in the company; or

(ii)

shares in one company within a group of companies to which the company referred to in that subsection belongs, are to be used for the remuneration of a person by reason of any office or employment held by that person in a company within the same group of companies;[Act 25 of 2025 wef 08/12/2025]

(b)

in the case of subsection (7), shares in one company within a group of companies to which both the holding company and subsidiary X belong, are to be used for the remuneration of a person by reason of any office or employment held by that person in a company within the same group of companies; or[Act 25 of 2025 wef 08/12/2025]

(c)

in the case of subsection (8A), shares in one company within a group of companies to which both the holding company and subsidiary Y belong, are to be used for the remuneration of a person by reason of any office or employment held by that person in a company within the same group of companies.[Act 25 of 2025 wef 08/12/2025]

[14PA

—(1) Where —(a)

a special purpose vehicle has acquired treasury shares or previously issued shares in a company and, in the basis period for any year of assessment between the year of assessment 2012 and the year of assessment 2025 (both years inclusive), transfers those shares to any person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in the company; and[Act 25 of 2025 wef 08/12/2025]

(b)

payment by the company for the shares transferred to the person has become due and payable,

then the company is allowed a deduction for the relevant year of assessment of an amount referred to in subsection (2).

(2) The amount of deduction under subsection (1) is —(a)

where the transferred shares are previously issued shares, the lower of the following:(i)

the amount paid or payable by the company for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(ii)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares; or

(b)

where the transferred shares are treasury shares, either —(i)

the lowest of the following:(A)

the amount paid or payable by the company to the special purpose vehicle for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(B)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares to the extent the amount so paid or payable has not been deducted from the amount paid or payable by the special purpose vehicle to the company for those shares;

(C)

the cost to the company of acquiring the shares, less any amount paid or payable by the person for the shares; or

(ii)

where the amounts referred to in sub‑paragraph (i)(A) and (B) are both nil, the cost to the company of acquiring the shares less any amount paid or payable by the person for the shares.

(2A) Where —(a)

a special purpose vehicle has acquired treasury shares or previously issued shares in a company and, in the basis period for the year of assessment 2026 or any subsequent year of assessment, transfers those shares to any person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in the company; and

(b)

payment by the company for the shares transferred to the person has become due and payable,

then the company is allowed a deduction for the relevant year of assessment of an amount referred to in subsection (2B).

[Act 25 of 2025 wef 08/12/2025]

(2B) The amount of deduction under subsection (2A) is —(a)

where the transferred shares are previously issued shares, the lower of the following:(i)

the amount paid or payable by the company for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(ii)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares; or

(b)

where the transferred shares are treasury shares, the cost to the company of acquiring the shares, less any amount paid or payable by the person for the shares.[Act 25 of 2025 wef 08/12/2025]

(3) For the purposes of subsections (2)(a)(ii) and (b)(i)(B) and (2B)(a)(ii), the cost to the special purpose vehicle of acquiring the transferred shares is determined by any of the methods referred to in subsection (4), being (if the company has previously been allowed a deduction under this section for a transfer of shares by the special purpose vehicle) the method that is consistently adopted by the special purpose vehicle when ascertaining its cost of acquiring transferred shares under this section.[Act 25 of 2025 wef 08/12/2025]

(4) The methods referred to in subsection (3) are as follows:(a)

on the basis that the company’s shares acquired by the special purpose vehicle at an earlier point in time are deemed to be transferred first;

(b)

on the basis of the formula

where A

is the number of the transferred shares;

B

is the total number of the company’s shares held by the special purpose vehicle immediately before the transfer; and

C

is the total cost to the special purpose vehicle of acquiring the company’s shares held by it immediately before the transfer;

(c)

on the basis of the aggregate cost of all of the company’s shares transferred by the special purpose vehicle under subsection (1) or (2A) (as the case may be) within every regular interval in the basis period during which the transfer in question occurred, where the cost of all shares so transferred within a regular interval is ascertained by the formula

where D

is the total number of the company’s shares transferred by the special purpose vehicle under subsection (1) or (2A) (as the case may be) within that interval;

E

is the total number of the company’s shares held by the special purpose vehicle at the end of the period equal in length to the regular interval immediately preceding that interval;

F

is the total number of the company’s shares acquired by the special purpose vehicle within that interval;

G

is the total cost to the special purpose vehicle of acquiring the company’s shares held by it at the end of the period equal in length to the regular interval immediately preceding that interval; and

H

is the total cost to the special purpose vehicle of acquiring the company’s shares within that interval.

[Act 25 of 2025 wef 08/12/2025]

(5) For the purpose of subsections (2)(b)(i)(C) and (ii) and (2B)(b), the cost to the company of acquiring the transferred shares is determined by any of the methods referred to in section 14L(4) as modified in accordance with subsection (6), being (if the company has previously been allowed a deduction under this section) the method that is consistently adopted by the company when ascertaining its cost of acquiring transferred shares under this section.[Act 25 of 2025 wef 08/12/2025]

(6) The methods referred to in section 14L(4) apply for the purposes of subsection (5) as if a reference to the transfer under section 14L were a reference to the transfer of the treasury shares by the company to the special purpose vehicle.

(7) Where —(a)

a special purpose vehicle has acquired treasury shares or previously issued shares in the holding company of another company (called in this section subsidiary X) and, in the basis period for any year of assessment between the year of assessment 2012 and the year of assessment 2025 (both years inclusive), transfers those shares to a person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in subsidiary X; and[Act 25 of 2025 wef 08/12/2025]

(b)

payment by subsidiary X for the shares transferred to the person has become due and payable,[Act 25 of 2025 wef 08/12/2025]

then subsidiary X is allowed a deduction for the relevant year of assessment of an amount referred to in subsection (8).

[Act 25 of 2025 wef 08/12/2025]

(8) The amount of deduction under subsection (7) is —(a)

where the transferred shares are previously issued shares, the lower of the following:(i)

the amount paid or payable by subsidiary X for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;[Act 25 of 2025 wef 08/12/2025]

(ii)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares; or

(b)

where the transferred shares are treasury shares, either —(i)

the lowest of the following:(A)

the amount paid or payable by subsidiary X for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;[Act 25 of 2025 wef 08/12/2025]

(B)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares to the extent the amount so paid or payable has not been deducted from the amount paid or payable by the special purpose vehicle to the holding company for those shares;

(C)

the cost to the holding company of acquiring the shares, as determined in accordance with section 14L(8A), less any amount paid or payable by the person for the shares; or

(ii)

where the amount referred to in sub‑paragraph (i)(B) is nil, the lower of the amounts referred to in sub‑paragraph (i)(A) and (C).

(8A) Where —(a)

a special purpose vehicle has acquired treasury shares or previously issued shares in the holding company of another company (called in this section subsidiary Y) and, in the basis period for the year of assessment 2026 or any subsequent year of assessment, transfers those shares to a person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in subsidiary Y; and

(b)

payment by subsidiary Y for the shares transferred to the person has become due and payable,

then subsidiary Y is allowed a deduction for the relevant year of assessment of an amount mentioned in subsection (8B).

[Act 25 of 2025 wef 08/12/2025]

(8B) The amount of deduction under subsection (8A) is —(a)

where the transferred shares are previously issued shares, the lower of the following:(i)

the amount paid or payable by subsidiary Y for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(ii)

the cost to the special purpose vehicle of acquiring the shares, less any amount paid or payable by the person for the shares; or

(b)

where the transferred shares are treasury shares, the lower of the following:(i)

the amount paid or payable by subsidiary Y for the shares, less any amount paid or payable by the person for the shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount;

(ii)

the cost to the holding company of acquiring the shares, as determined in accordance with section 14L(8A), less any amount paid or payable by the person for the shares.[Act 25 of 2025 wef 08/12/2025]

(9) For the purpose of subsections (8)(a)(ii) and (b)(i)(B) and (8B)(a)(ii), the cost to the special purpose vehicle of acquiring the transferred shares is determined by any of the methods referred to in subsection (4) as modified in accordance with subsection (10), being (if subsidiary X or subsidiary Y (as the case may be) has previously been allowed a deduction under this section for a transfer of shares by the special purpose vehicle) the method that is consistently adopted by the special purpose vehicle when ascertaining its cost of acquiring shares under this section.[Act 25 of 2025 wef 08/12/2025]

(10) The methods referred to in subsection (4) apply for the purposes of subsection (9) as if —(a)

a reference to the company is a reference to the holding company;[Act 25 of 2025 wef 08/12/2025]

(b)

a reference to subsection (1) is a reference to subsection (7); and[Act 25 of 2025 wef 08/12/2025]

(c)

a reference to subsection (2A) is a reference to subsection (8A).[Act 25 of 2025 wef 08/12/2025]

(11) For the purposes of this section, shares are transferred to a person when both the legal and beneficial interests in the shares are so transferred.

(12) No deduction is allowed to a company under this section if a deduction has already been allowed to the company under any other provision of this Act in respect of the transferred shares.

(13) In this section —“group of companies” means 2 or more companies each of which is either a holding company or subsidiary of the other or any of the others;

[Deleted by Act 33 of 2022 wef 04/11/2022]

“previously issued shares”, in relation to a company, means shares previously issued by the company and acquired by the special purpose vehicle —(a)

on a stock exchange in Singapore or elsewhere; or

(b)

from a person other than the company which issued the shares;

“regular interval”, in relation to a basis period, means one of a number of equal periods within the basis period —(a)

where the aggregate of all of those equal periods is equal to the basis period; and

(b)

where the duration of each equal period —(i)

in a case where the company, subsidiary X or subsidiary Y has previously been allowed a deduction under this section for a transfer of shares by the special purpose vehicle, is the one previously adopted by the special purpose vehicle for the purpose of this section; or[Act 25 of 2025 wef 08/12/2025]

(ii)

in any other case, is any duration adopted by the special purpose vehicle for the purpose of this section;

“relevant year of assessment” means the year of assessment which relates to the basis period in which the later of the following occurs:(a)

the transfer of the shares under subsection (1), (2A), (7) or (8A) (as the case may be) to the person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person in the company, subsidiary X or subsidiary Y, as the case may be;[Act 25 of 2025 wef 08/12/2025]

(b)

the payment by the company, subsidiary X or subsidiary Y (as the case may be) for the shares so transferred becomes due and payable;[Act 25 of 2025 wef 08/12/2025]

“special purpose vehicle” means a trustee of a trust (when acting in such capacity) that is set up solely for the administration of a stock option scheme or share award scheme under which —(a)

in the case of subsection (1) or (2A), either —(i)

shares in the company referred to in that subsection are to be used for the remuneration of a person by reason of any office or employment held by that person in the company; or

(ii)

shares in one company within a group of companies to which the company referred to in that subsection belongs, are to be used for the remuneration of a person by reason of any office or employment held by that person in a company within the same group of companies;[Act 25 of 2025 wef 08/12/2025]

(b)

in the case of subsection (7), shares in one company within a group of companies to which both the holding company and subsidiary X belong, are to be used for the remuneration of a person by reason of any office or employment held by that person in a company within the same group of companies; or[Act 25 of 2025 wef 08/12/2025]

(c)

in the case of subsection (8A), shares in one company within a group of companies to which both the holding company and subsidiary Y belong, are to be used for the remuneration of a person by reason of any office or employment held by that person in a company within the same group of companies.[Act 25 of 2025 wef 08/12/2025]

[14PA