Tax due on the lower of (1) the difference between exercise price and fair market value of the shares at vesting, and (2) difference between exercise price and fair market value of shares at exercise, but tax will be payable only at exercise.
No tax on sale unless employee is in business of buying and selling securities and the gains are remitted to Malaysia.
*For Malaysian tax purposes, the fair market value of the stock is the average of the high and low price of the stock on a given date.
Generally, yes, if subsidiary reimburses parent for costs associated with plan. However, such deduction is not available for newly issued shares.
Subsidiary may not reimburse for costs allocated to awards made to directors, unless director receives award in his/her capacity as an employee.
Written agreement recommended.
Income Tax:
Subsidiary required to notify Inland Revenue Board of each grant.
Subsidiary also has to report all taxable events on an annual basis on a prescribed form.
Withholding required unless employee elects in writing to pay income tax on his/her own.
Social Insurance Contributions:
Generally, no.
Filing of Information Memorandum with Malaysian Securities Commission required within seven days of each distribution of grant materials to employees in Malaysia. Filing must contain all of the grant materials distributed to employees in Malaysia.
Certain subsidiary director reporting obligations apply.