Equity Remuneration Incentive Scheme (Start-Ups) - IRAS

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34. Whenever a qualifying company grants a tranche of stock options or share awards to a qualifying employee where the gain from the subsequent exercise of the options can qualify for a 75% tax exemption under the ERIS (Start-Ups), the company is required to give a written confirmation to the employee confirming that the qualifying criteria of the ERIS (Start-Ups) have been met in respect of that tranche of options or shares granted (Annex 5 provides a specimen of the written confirmation, which sets out the minimum information to be incorporated). 35. This requirement applies to every tranche of options or share awards granted by the qualifying company under its ERIS (Start-Ups) Plan to each of its qualifying employees. If it were subsequently found that any of the qualifying criteria under the ERIS (Start-Ups) has not been met, the 75% tax exemption will not be granted, or if previously granted, be withdrawn on the gains derived by the employee from the grant of or the exercise of that tranche of share awards or stock options. The Comptroller may also impose appropriate penalties on the company for giving any incorrect information unless this is due solely to an incorrect declaration made by its employee with respect to his total working time per week or the level of his beneficial share ownership in the company at the time of the grant of options (see paragraphs 19 to 21). 36. In addition, a qualifying company is required to keep sufficient documentation, including any declaration given by its qualifying employee, to show, when required by the Comptroller, that the qualifying criteria under the ERIS (Start-Ups) have been met at the time the options were granted to the qualifying employee. Qualifying Employee 37. As mentioned in paragraph 19, where an employee, who is granted stock options or share awards by a qualifying company that operates an ERIS (Start-Ups) Plan, works for the company for less than 30 hours per week at the time of the grant of stock options or shares, he is required to make a declaration to the company on his total working time per week at the time to enable the company to determine whether he meets the 75% test to qualify him under the ERIS (Start-Ups). 38. Further, as mentioned in paragraph 21, where it is not clear to the qualifying company that the employee does not have effective control of the company, he is required to make a declaration to the company on his beneficial ownership, directly or indirectly, of voting shares in the company. 39. In the absence of a declaration, where required, to the qualifying company, the employee will not be considered as a qualifying employee under the ERIS (Start- Ups). If an employee is subsequently found to have made any incorrect declaration to the qualifying company, the 75% tax exemption will not be granted or, if previously granted, will be withdrawn on the relevant ESOP gains. In such cases, the Comptroller may also impose appropriate penalties on the employee. 40. In addition, a qualifying employee should keep the written confirmation mentioned in paragraph 34 and upon request, produce it to the Comptroller for verification. 10
ENQUIRIES 41. Taxpayers who have any queries concerning ERIS (Start-Ups) may call the Individual Income Tax Division (IITD) Helpline at 1800-3568300. Inland Revenue Authority of Singapore 11
Page 1 and 2: IRAS CIRCULAR EQUITY REMUNERATION I
Page 3 and 4: EQUITY REMUNERATION INCENTIVE SCHEM
Page 5 and 6: the SGX rules on ESOPs provide that
Page 7 and 8: time per week with that company amo
Page 9: 28. The company will not be allowed
Page 13 and 14: XYZ Company Pte Ltd Balance Sheet a
Page 15 and 16: Example 2 Mr Y is granted stock opt
Page 17 and 18: Computation of the amount of Mr F
Page 19 and 20: Example 2 Jill Company Ltd is incor
Page 21: ANNEX 5 Dear QUALIFYING CRITERI

Equity Remuneration Incentive Scheme (Start-Ups) - IRAS

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