ESOP RSU Tax, PMET Salary Benchmark and Severance Guide 2026

Under Section 10(6) of the Singapore Income Tax Act, ESOP gains are calculated as the open market price (fair market value, FMV) of the shares on the date of exercise minus the exercise price paid by the employee. For example: FMV at exercise = S$15.00 per share; exercise price = S$3.00; gain per share = S$12.00; 10,000 shares exercised; total ESOP gain = S$120,000. This S$120,000 is added to the employee’s other employment income in the year of assessment when the exercise occurred (e.g., exercised in 2025 = Year of Assessment 2026). The combined chargeable income is then taxed at IRAS progressive rates after deducting applicable reliefs (CPF contributions, personal reliefs, NSman relief, etc.). For shares listed on the Singapore Exchange, the FMV is typically the last done price on the exercise date. For unlisted private company shares, FMV is based on the most recent funding round valuation, net asset value, or an independent valuation — whichever is most appropriate and defensible.

RSUs (Restricted Stock Units) are a form of Employee Share Ownership (ESOW) plan where employees receive actual shares upon vesting rather than options to purchase shares. The tax treatment is similar to ESOP but with one key difference: the taxable event for RSUs is the vesting date (not an exercise decision made by the employee), and the exercise price is effectively zero. RSU gain = FMV at vesting date × number of units vested. The total RSU gain is added to employment income in the year of assessment when the vesting occurred. Since there is no exercise choice, RSU holders cannot time the tax event — vesting is automatic on the schedule set by the grant agreement. For multi-tranche RSU grants (e.g., 25% vesting per year over 4 years), each tranche is a separate taxable event in its own year of assessment. This means a 40,000-unit RSU grant vesting over 4 years generates four separate employment income inclusions, one per year. If the share price increases over the vesting period, later tranches generate higher gains than earlier ones — the ESOP Tax Calculator on this page models this multi-year dynamic.

The Equity Remuneration Incentive Scheme (ERIS) was a Singapore tax incentive that provided partial exemptions on ESOP and ESOW gains for employees of qualifying companies — typically SMEs and startups. At its peak, ERIS allowed qualifying employees to exclude up to 75% of ESOP gains from taxable income. As announced in Budget 2013, ERIS was scheduled for phase-out to rationalise tax treatment of remuneration. From Year of Assessment 2025 (income earned 2024), ERIS exemptions are completely unavailable. All ESOP and RSU gains are now 100% taxable as employment income, with no exemptions or partial exclusions regardless of the company’s size, listing status, or ESOP plan structure. Impact for employees: if you were relying on historical ERIS calculations when planning future ESOP exercises, those calculations are now void. For startup employees with large accumulated ESOP grants at low exercise prices, the removal of ERIS can significantly increase the effective tax rate on exercises. A 75% ERIS exemption previously allowed an employee with S$200,000 in ESOP gains to include only S$50,000 as taxable income; from YA2025, the full S$200,000 is taxable. This has made Singapore ESOP timing strategy more important than ever.

The deemed exercise rule applies to non-Singapore Citizen employees (foreigners on Employment Pass, S Pass, Work Permit, and Singapore Permanent Residents who are leaving permanently) who have unexercised ESOP options or unvested RSU/ESOW plans when their Singapore employment ends. Under the rule, all such unvested or unexercised plans are “deemed” to have been exercised or vested one month before the date of employment cessation (or the date the option/award was granted, whichever is later). The deemed exercise creates a taxable ESOP/RSU gain even though the actual exercise or vesting has not occurred. The gain is calculated using the FMV of the shares at the deemed exercise date. The employer must file Form IR21 (tax clearance) with IRAS at least one month before the employee’s last day of employment and must withhold all monies (including pending salary payments) until IRAS grants tax clearance. If the actual gain upon eventual exercise is lower than the deemed gain, IRAS may reassess the tax liability based on the lower actual figure. The deemed exercise rule prevents foreigners from leaving Singapore with large unrealised ESOP gains without paying Singapore tax.

COMPASS (Complementarity Assessment Framework) is MOM’s points-based system for evaluating Employment Pass applications submitted from 1 September 2023. Applicants must score at least 40 points across five criteria to qualify for an EP. The C1 criterion — Salary — awards points based on how the candidate’s fixed monthly salary compares to local PMET (Professionals, Managers, Executives, and Technicians) salaries in the same sector: 10 points if the candidate’s salary is at or above the 65th percentile of local PMETs in the sector; 20 points if the salary is at or above the 90th percentile. Salary below the 65th percentile earns 0 points on C1. Sector benchmarks are updated annually by MOM and take effect on 1 January each year for new applications and 1 July for renewals. For 2026, salary benchmarks increased approximately 5% at the 65th percentile and 4% at the 90th percentile vs 2025 figures. The C1 criterion is often the most impactful factor in COMPASS because salary is the easiest attribute to adjust. An employer who offers a candidate at S$9,500 (below the 65th percentile for Professionals in Tech at ~S$13,000) earns 0 C1 points — requiring the application to compensate with high scores on other criteria (qualifications, diversity, skills bonus) to reach 40 total.

Employment Pass (EP) eligibility requires meeting two conditions: Stage 1 — meet the minimum qualifying salary (S$5,600/month for most sectors; S$6,200/month for financial services as of May 2026); Stage 2 — score at least 40 COMPASS points across five criteria. Stage 1 is a binary threshold: below S$5,600/month = automatically ineligible regardless of qualifications. Stage 2 uses the COMPASS framework where C1 (salary), C2 (qualifications), C3 (diversity), C4 (support for local employment), and C5 (skills bonus) each contribute up to 20 points. To check: first confirm your salary exceeds the qualifying threshold. Then estimate your COMPASS score — the C1 salary criterion is the most straightforward to model using MOM sector percentile data. The PMET Salary Benchmark Calculator on this page shows your estimated C1 score (0, 10, or 20 points) based on your occupation group, sector, and monthly salary. For an official assessment, use MOM’s Self-Assessment Tool at www.mom.gov.sg/passes-and-permits/employment-pass/self-assessment-tool (requires employer CorpPass login).

According to MOM’s Labour Force in Singapore 2025 report (released February 2026), the median gross monthly income from employment for full-time employed Singapore residents was S$5,775 in mid-2025 — a 5.0% increase from S$5,500 in 2024. Including employer CPF contributions (17% for workers aged 55 and below), the median total compensation reaches approximately S$6,757/month. PMET-specific medians are significantly higher: Managers and Administrators: approximately S$10,820/month; Professionals (including engineers, analysts, IT professionals): approximately S$8,363/month; Technicians and Associate Professionals: approximately S$4,735/month. In 2025, 64.2% of employed Singapore residents held PMET roles — up from 63.8% in 2024 — reflecting ongoing structural shift toward higher-skill employment. The 20th percentile income was S$3,164/month and the 80th percentile approximately S$10,290/month based on MOM distribution data. Real wage growth at the median was 4.1% in 2025 (after 1.9% inflation), suggesting genuine purchasing power improvement for most full-time workers.

Yes — employers who grant ESOP or ESOW plans to employees are legally required to report all gains derived from these plans on IRAS Appendix 8B, filed together with Form IR8A for each affected employee. Appendix 8B must be provided to employees by 1 March of the year following the year of assessment (e.g., for gains in 2025, employers must provide Appendix 8B to employees by 1 March 2026). Employers participating in the Auto-Inclusion Scheme (AIS) submit income data directly to IRAS electronically — employees under AIS do not need to include ESOP gains in their personal tax returns as they are automatically included in their tax assessments. Employers NOT under AIS must provide Appendix 8B to employees, who must then declare ESOP gains under “Employment Income” in their personal income tax returns. All listed Singapore companies and most large multinational employers are on AIS. Employees uncertain whether their employer is on AIS should check with HR. If you receive Appendix 8B but are unsure how to include it in your tax return, IRAS’s individual income tax helpline (1800 356 8300) can guide you through the process.

Singapore’s salary distribution is highly sector-dependent, reflecting the two-speed economy between high-value financial and technology services and domestically oriented sectors. Based on MOM occupational wage data and KPMG/Mercer sector analysis for 2026: Financial Services and Banking consistently pays the highest premiums — professionals in banking, asset management, and insurance earn 30–45% above the all-sector median for equivalent roles. Technology and ICT is the second highest — software engineers, data scientists, and cybersecurity professionals earn 25–35% premiums, with acute shortages in AI, cloud, and quantum computing. Professional Services and Consulting (management consulting, legal, accounting) command 20–30% premiums. Healthcare and Life Sciences/Pharma: 8–15% premium, particularly for specialists, clinical researchers, and regulatory affairs professionals. Manufacturing and industrial: approximately at-median to 5–8% premium for PMETs. Government and public sector: slightly below private sector medians (approximately 3–8% discount) but with greater job security and pension benefits. Media, F&B, and retail sectors typically pay 10–15% below sector-neutral medians. These premiums matter significantly for COMPASS C1 scoring because MOM calculates percentile benchmarks within each sector — a salary of S$9,000 may be at the 45th percentile in tech but the 75th percentile in retail.

Yes — MOM’s advisory norm of 2 weeks to 1 month per year of service is a guideline, not a legal cap. Singapore’s Employment Act does not specify a maximum severance amount. Employers and employees are free to negotiate any amount above (or below) the MOM norm by mutual agreement. For senior PMETs (Directors, VPs, C-Suite), severance packages frequently exceed the MOM norm, particularly in: (1) Multinational companies with global severance policies that apply more generous formulas than Singapore’s local norm; (2) Situations where the employee has unique institutional knowledge that would be disruptive to transfer; (3) Companies seeking clean separations to avoid wrongful dismissal claims or reputational risk from senior-level departures. Negotiation is most effective when framed around the employer’s cost analysis — replacement cost for a VP position typically ranges from 6 to 12 months salary in recruitment fees, headhunter commissions, and ramp-up time, making a marginally more generous severance package a rational economic choice for the company. Non-monetary components (accelerated RSU vesting, outplacement services, continued medical insurance, garden leave) are often easier for employers to approve than additional cash severance because they have lower immediate cash flow impact.

Garden leave (also called “gardening leave”) is an arrangement where an employee is required to stay away from work during their notice period — typically for competitive sensitivity reasons (protecting client relationships, preventing poaching of colleagues, protecting confidential information) — while continuing to receive their full salary and benefits until the notice period ends. Pay-in-lieu of notice is a lump-sum cash payment equivalent to the salary the employee would have earned during the notice period, in exchange for immediate departure without serving the notice. Financially, both appear equivalent: a 3-month notice period results in either 3 months of full salary paid during garden leave, or one lump sum of 3 months salary as pay-in-lieu. However, the practical differences are significant for departing PMETs: (1) Benefits continuity: during garden leave, all employment benefits (medical insurance, housing allowance, employee perks) typically continue as you are still employed. Pay-in-lieu terminates these benefits on the day of departure. (2) ESOP vesting: garden leave may allow additional RSU/ESOP tranches to vest if the grant agreement treats garden leave as continued employment. (3) Employment status: garden leave means LinkedIn shows “current employment” during the notice period, which maintains optionality during job search. (4) Tax: pay-in-lieu is fully taxable as employment income; garden leave salary is also taxable but spread across months, slightly smoothing the tax impact.

Singapore Permanent Residents (PRs) who are leaving Singapore permanently (i.e., have their PR status renounced or not renewed, or are departing with no intention to return to employment in Singapore) are subject to the deemed exercise rule for unexercised ESOP and unvested RSU/ESOW plans. Tax clearance process: (1) The employer must file Form IR21 (Notification of Employee Cessation) with IRAS at least one month before the PR employee’s last day of employment; (2) IRAS will then issue a tax clearance certificate indicating the amount of tax to be withheld; (3) The employer must withhold all monies due to the employee (including salary, bonus, leave encashment, and pending payments) until IRAS grants clearance; (4) Once clearance is obtained, the employer releases the withheld monies to the employee. For ESOP deemed exercise: IRAS will compute the gains on all unexercised options and unvested awards as of the deemed exercise date (1 month before cessation). The employee can request reassessment if actual gains upon eventual exercise are lower than the deemed amount. Singapore Citizens are not subject to the deemed exercise rule when leaving Singapore — they remain taxable on Singapore-sourced income regardless of residence, but the deemed exercise rule specifically targets non-citizens.

ESOP and RSU gains increase your total chargeable income but do not reduce your eligibility for most IRAS personal reliefs. You can still claim all applicable reliefs in the year you exercise ESOP or vest RSUs: CPF contribution relief (employee CPF on salary income, not on ESOP gains — ESOP gains are not subject to CPF); NSman relief (for eligible male Singapore Citizens/PRs who performed national service); earned income relief; parent/handicapped parent relief; spouse/family relief; course fees relief (up to S$5,500 per year); life insurance relief; and Supplementary Retirement Scheme (SRS) contributions (up to S$15,300 for residents). Total personal reliefs are capped at S$80,000 per year of assessment — with a large ESOP gain year, you may already be well above the income band where reliefs provide the most marginal benefit. One strategic use of SRS contributions in an ESOP exercise year: maxing out the S$15,300 SRS contribution reduces chargeable income by S$15,300. At a 19% marginal tax rate (applicable to chargeable income between S$200,001 and S$240,000), this saves S$2,907 in IRAS tax — worth significantly more than in a lower-income year. If you anticipate a large ESOP exercise, plan your SRS contribution for the same calendar year to maximise the deduction’s tax value.

Yes — Singapore’s Workforce Singapore (WSG) and NTUC’s e2i (Employment and Employability Institute) provide dedicated support for retrenched PMETs: (1) Career Matching Services: WSG’s Career Connect centres (at multiple locations including Lifelong Learning Institute, Workforce Singapore@Paya Lebar, and partner community development councils) provide free one-on-one career coaching, job matching, and resume consultations specifically for PMETs; (2) Professional Conversion Programme (PCP): for PMETs seeking to move into a new sector, PCPs provide industry-recognised training with employer co-funding — training grant of 50–90% for eligible course fees and monthly training allowance; (3) Career Support Programme (CSP): provides salary co-funding for employers who hire mature PMETs (aged 40 and above) or long-term unemployed Singaporeans — up to S$20,000 over the first year of employment; (4) NTUC e2i Career Studios: walk-in career advisory services with sector specialists in technology, finance, healthcare, and professional services; (5) SkillsFuture Level-Up Programme: for those aged 40+, includes S$4,000 mid-career SFC credit and MCTA training allowance during retraining. For senior PMETs (VP/Director/CxO level), WSG also provides the PME Taskforce support services, including targeted matching to senior management and board-level opportunities at SMEs seeking professional expertise.

MOM’s COMPASS salary benchmarks are sector-specific — they compare a candidate’s salary against local PMETs in the same industry, not against all Singapore PMETs. This means the same job title and years of experience produces different COMPASS percentile scores depending on which sector the employer operates in. Example: a financial analyst with a S$7,000/month salary at a bank (Financial Services sector) may be at the 45th percentile, earning 0 COMPASS C1 points. The same analyst at a retailer (General Services sector) with S$7,000/month may be at the 75th percentile, earning 10 COMPASS C1 points. Key sector patterns for 2026: Financial Services (banking, insurance, asset management) has the highest absolute salary benchmarks — the 90th percentile for Professionals in finance can exceed S$25,000/month due to large bonus cultures; Technology/ICT has rapidly rising benchmarks — KPMG data shows the 90th percentile in tech increased above the projected range; Air & Transport and Real Estate showed particularly rapid benchmark increases at the 90th percentile in 2025–2026, suggesting intense competition for top talent in these sectors; Fund Management Activities and Banking actually saw 90th percentile benchmarks decline slightly in 2025, possibly reflecting a shift from base salary to deferred compensation. Always use sector-specific benchmarks when assessing COMPASS eligibility, not national average figures.

All Singapore employers granting ESOP or ESOW plans are legally required under the Income Tax Act to report employees’ gains via Appendix 8B, filed together with Form IR8A. Failure to comply is a statutory offence. Employee remedies and obligations if Appendix 8B is not provided: (1) The employee remains personally responsible for declaring ESOP gains in their income tax return, even if the employer fails to provide Appendix 8B. “My employer didn’t give me Appendix 8B” is not a defence against IRAS for under-declaration of income; (2) Employees can contact IRAS (via myTax Portal or the helpline 1800 356 8300) to flag that their employer has not provided required documentation; (3) IRAS has audit mechanisms to cross-check employer-reported income with employee-filed returns and may investigate discrepancies; (4) Employers who fail to file or underreport ESOP gains face IRAS enforcement action, including penalties and prosecution under the Income Tax Act. For employees who exercised ESOP or had RSUs vest and are uncertain whether the employer has reported correctly: check your myTax Portal income statement (available from March following the year of assessment) to confirm whether the ESOP gains appear in your pre-filled auto-assessment. If they do not appear and your employer is not on AIS, you must manually declare the gains before the tax filing deadline.