Salaries Tax – Taxation of Share Awards

Our view on a recent Hong Kong court case decision that reaffirms the importance of the key considerations in structuring share plans

Our view on a recent court case that reaffirms the considerations in structuring share ...

Recently, the Court of First Instance’s (“CFI”) decision in Richard Paul Mark Aidan Forlee v Commissoner of Inland Revenue [2021] HKCFI 2476 allowed the taxpayer’s appeal reversing the previous decision of the Board of Review.

The decision is important as it confirms a distinction between a vesting period, which defers the accrual of the income, and an outright grant with the possibility of forfeiture on the occurrence of a future event. This case will be of interest to employers that have or are looking to establish equity-based remuneration schemes to reward and incentivise staff, while having a retention element by linking the grant of shares to on-going employment.

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Murray Sarelius
National Head of People Services
KPMG China
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David Siew
KPMG China
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Gabriel Ho
KPMG China
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