Exemption of tax on gains or profits from equity remuneration incentive scheme (start-ups)
13M.—(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 right or benefit under any share acquisition scheme granted during the period from 16th February 2008 to 15th February 2013 (both dates inclusive) to acquire shares in any qualifying company, there shall, subject to this section, be exempt from tax 75% of an amount of such gains or profits in that year of assessment 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 shall 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 him and which qualifies for exemption under this section, exceeds $10 million;
(b)
which is derived by him on or after 16th February of the 10th year following the year in which he first derived such gains or profits which qualified for exemption under this section; or
(c)
which is derived by him for the release of his right or benefit to acquire shares in any qualifying company by reason of his resignation or the termination of his employment with the qualifying company due to his misconduct.
(4) For the purposes of this section and section 13J, where ––
(a)
a company grants any right or benefit under any share acquisition scheme during the period from 16th February 2008 to 15th February 2013 (both dates inclusive) to acquire shares under a tranche of the share acquisition scheme; and
(b)
any gains or profits derived by a qualifying employee from any right or benefit granted under that tranche qualifies for tax exemption under this section as well as section 13J,
the company shall opt for the tax exemption under this section or section 13J to apply in respect of the gains or profits relating to that tranche but not under both sections.
(5) Where a company has opted under subsection (4) for tax exemption under this section to apply to the gains or profits in respect of a tranche of a share acquisition scheme, tax exemption under section 13J or 13L —
(a)
shall, subject to paragraph (b), not be available in respect of any right or benefit to acquire shares granted by the company under any tranche subsequent to that tranche under the share acquisition scheme; and
(b)
shall be available in respect of any right or benefit to acquire shares granted subsequent to the option by the company under any tranche under the share acquisition scheme only where the conditions for tax exemption under this section are not satisfied in respect of any such subsequent tranche granted.
(6) The Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.
(7) In this section —
“minimum holding period” —
(a)
in relation to a right or benefit to acquire shares in a qualifying company under any stock option scheme, means the period prescribed by the Singapore Exchange during which no option may be exercised under a stock option scheme implemented by any company listed on that Exchange, which would have been applicable to the stock option granted by the qualifying company if it were a company listed on that Exchange;
(b)
in relation to a right or benefit to acquire shares in a qualifying company under any share acquisition scheme (other than a stock option scheme), means —
(i)
a period of at least one year after the grant of the right or benefit, during which the shares so acquired may not be sold, if 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; or
(ii)
a period of at least 6 months after the grant of the right or benefit, during which the shares so acquired may not be sold, if 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;
“qualifying company” means a company incorporated in Singapore which, at the time of the grant to its employees of any right or benefit to acquire its shares —
(a)
carries on business in Singapore;
(b)
has been incorporated for 3 years or less;
(c)
has its total share capital beneficially held directly by no more than 20 shareholders —
(i)
all of whom are individuals; or
(ii)
at least one of whom is an individual holding at least 10% of the total number of issued ordinary shares of the qualifying company; and
(d)
has gross assets the market value of which does not exceed $100 million;
“qualifying employee” means an employee (other than any non-executive director) of a company, who at the time of the grant to him of any right or benefit to acquire the shares of the company —
(a)
is committed to work —
(i)
where the time of the grant is before 1st January 2010 —
(A)
at least 30 hours per week for the company; or
(B)
where he is committed to work less than that number of hours, at least 75% of his total working time per week for the company; and
(ii)
where the time of the grant is on or after 1st January 2010 —
(A)
at least the number of hours per week referred to in section 66A(1) of the Employment Act (Cap. 91) for the company; or
(B)
where he is committed to work less than that number of hours, at least 75% of his total working time per week for the company; and
[27/2009 wef 01/01/2010]
(b)
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 company which grants the right or benefit to acquire its shares;
“share acquisition scheme” means a scheme which imposes a minimum holding period requirement and allows an employee of a company to own or purchase shares in a qualifying company, including stock options, share awards and other similar forms of employee share purchase plans but excluding phantom shares rights, share appreciation rights and any other similar rights;
“shares” includes stocks but does not include redeemable or convertible shares or shares of a preferential nature;
“total working time”, in relation to a qualifying employee, means the total period of time spent by him as an employee for all his employers plus, if applicable, the total period of time, which shall be deemed to be 10 hours per week, spent by him on remunerative work as a self-employed person.