On October 31, 2014, the Bureau of Internal Revenue issued regulations pursuant to which the tax treatment of stock options beginning November 1, 2014 is determined based upon the position of the employee. For a “rank and file” employee, the income is considered additional compensation subject to income tax withholding. For a “supervisory or managerial” employee, the income is considered a fringe benefit subject to fringe benefits tax. Fringe benefit tax is payable by the employer generally at a rate of 32%.
However, if stock options are granted by a foreign parent company or a foreign affiliate of the local employer of the local employee-grantee who occupies a managerial or supervisory position, the stock options should only be subject to fringe benefit tax if the local employer reimburses the foreign parent company or foreign affiliate for the amount of the spread.