1. Home /
  2. Blog
  3. /
  4. Tax Treatment Of Employees Stock Options In Pakistan

Tax treatment of Employees’ Stock Options in Pakistan

author Befiler date
Tax treatment of Employees’ Stock Options in Pakistan

Stock options are a type of employee compensation that allows employees to purchase company stock at a predetermined price, known as the strike price. Stock options can be an attractive benefit for employees, as they allow them to potentially profit from the appreciation of the company’s stock.

In Pakistan, the taxability of stock options depends on a few factors. The first component of taxation is whether the shares have vested to the employee with or without restrictions on transfer or sale. If the shares have vested to the employee with restrictions on transfer, they will not be considered as issued and therefore not taxable until the restriction is removed. On the other hand, if the shares have vested to the employee without any restrictions, they will be considered as issued and taxable as salary by the amount of the market value minus any strike price paid for the shares.

The market value for a listed company is the quoted price on the stock exchange, while the market value for a private company is the balance sheet break-up value, calculated as the equity divided by the number of shares.

The second component of taxation relates to the disposal of the shares. After the shares have been issued and any tax has been paid on them as salary, they will be reflected in the personal wealth statement until they are disposed of. When the shares are disposed of, any capital gain (the sale consideration minus the amount taxed as salary and the strike price paid) will be taxed.

In the case of a private company, the full amount of the capital gain will be taxed at normal rates, which range from 5% to 35% depending on the amount. In the case of a listed company, the capital gain will be taxed at a declining rate, starting at 15% if disposed of within one year and decreasing to 0% after six years. This rule applies to shares issued after July 1, 2022.

In conclusion, the taxability of stock options in Pakistan depends on the vesting and transfer restrictions of the shares, as well as the timing and circumstances of their disposal. It is important for employees to understand the tax implications of stock options in order to properly plan for and manage their financial affairs.

Suggested Blog Posts


how to become tax filer in pakistan

online ntn registration in pakistan

Income Tax Return

File Taxes

E-filling & NTN Registration

The easiest & quickest way to become a filer online. Register NTN, file income tax, check your FBR tax return. Filing taxes in Pakistan has never been easier before.

Tax Questions & Tools

Salary Calculator

NTN Finder



Contact Us

Tax Services

Befiler Tax Filing NTN Finder Salary Calculator income tax return tax refund tax preparation sales tax return filing e file income tax calculate tax return filing online file a tax return free tax online tax

accounts, amnesty, befiler, blog, business, calculator, capital, earning, excise, expense, fbr, filer, financial, house, income, invest, law, ntn, online, organization, pakistan, portal, property, returns, salary, sales, scheme, service, tax, withholding, AOP, Business registration, Online Preparing Tax Filing, NTN registration, NTN Verification, Salary tax calculator, FBR tax filing, Tax return, E-filing

logo dashboard image how to make ntn in pakistan how do i check my fbr return online benefit of filer pakistan how to open my fbr account without password atl status fbr fbr tax return last date pakistan income tax calculator last date for income tax returns pakistan salary tax pakistan taxation fbr tax rates pakistan sales tax rate ntn certificate fbr Companies: Its types, basics, purpose and registration benefits. Reviving Sicked Industrial Sectors through granting Tax Incentives FBR's measures to facilitate people Company Incorporation By a Non-US Resident: FBR's tax laws for SMEs are counter-productive Say No To Extra Taxes Proposed Elimination of Minimum Tax Regime for Listed Companies FBR to Incentivize IT industry Federal Budget 2022-23: Snapshot of Income and Sales Tax FBR Empowered To Disconnect Utility Connections of Non-Compliant Small Traders Taxing nation's savings: at what cost? Record tax collection by FBR of Rs. 6.1 trillion Tax for salaried individuals Documents required for filing Income Tax Returns in Pakistan The last date for submitting Income Tax Returns 2022 Let's talk about NTN, why should you register for it? LAST DATE OF TAX FILING FOR YEAR 2022 How to register your company online with Befiler Benefits of Becoming a Tax Filer in Pakistan What are taxes? And why are they important for the economy? Importance of trademark for your business What is an LLC, and what are the benefits of LLC Registration? Benefits of tax filing as business individual https://www.befiler.com/blog/intellectual-property-interesting-and-relevant-things-to-know-about https://www.befiler.com/blog/tax-amnesty-scheme-2022 https://www.befiler.com/blog/pm-imran-khan-to-distribute-rs-407bn-interest-free-loan-under-kamyab-pakistan-program https://www.befiler.com/blog/prime-ministers-relief-package-a-sigh-of-hope-for-the-nation https://www.befiler.com/blog/calling-out-freelancers-government-registering-them-for-controlling-money-laundering https://www.befiler.com/blog/withholding-taxes-in-pakistan-why-it-is-important-to-educate-yourself-and-how-can-you-get-a-refund-on-your-paid-withholding-tax-money https://www.befiler.com/blog/offences-penalties-and-prosecutions-you-can-land-in-hot-water-if-you-failed-to-comply-with-filing-tax-returns https://www.befiler.com/blog/its-the-time-to-profile-non-filers-fbrs-bid-to-launch-asaan-tax-portal https://www.befiler.com/blog/company-incorporation-process-how-i-can-register-my-company-in-pakistan-with-ease https://www.befiler.com/blog/business-ntn-registration-process-how-i-can-register-my-business-ntn-in-pakistan-conveniently https://www.befiler.com/blog/finance-supplementary-act-2022 https://www.befiler.com/blog/single-sales-tax-returns-a-new-sales-tax-returns-portal https://www.befiler.com/blog/implications-of-finance-supplementary-bill-2021-get-to-know-which-commodities-are-going-to-get-costlier https://www.befiler.com/blog/why-you-should-integrate-your-pos-system-with-fbr https://www.befiler.com/blog/sales-tax-its-fundamental-concepts-those-who-are-required-to-register-for-sales-tax-and-basics-of-sales-tax-registration https://www.befiler.com/blog/nadra-and-fbr-joining-hands-together-to-track-and-hunt-non-filers https://www.befiler.com/blog/online-correspondence-of-tax-notice-real-time-coordination-with-the-tax-body https://www.befiler.com/blog/exemptions-and-tax-concession-how-to-legitimately-remain-safe-by-paying-in-less-or-no-taxes https://www.befiler.com/blog/tax-credit-and-deductible-allowances-how-can-you-pay-less-in-taxes-and-save-more https://www.befiler.com/blog/calculation-of-taxes-on-your-salary https://www.befiler.com/blog/file-your-tax-returns-online-with-befiler https://www.befiler.com/blog/income-tax-filing-late-filing-late-filing-is-better-than-non-filing-and-notices-by-fbr https://www.befiler.com/blog/how-can-i-be-benefitted-from-becoming-a-filer-in-pakistan https://www.befiler.com/blog/strategy-for-fbr-transformation-and-enhancement-of-tax-collections https://www.befiler.com/blog/pakistans-tax-culture https://www.befiler.com/blog/befiler-makes-you-a-tax-filer-with-ease https://www.befiler.com/blog/making-tax-simple-for-people https://www.befiler.com/blog/important-facts-to-know-about-ntn-registration https://www.befiler.com/blog/tax-filing-for-salaried-individuals https://www.befiler.com/blog/tax-amnesty-scheme-2019 https://www.befiler.com/blog/quick-glance-at-major-changes-in-the-federal-budget-for-the-financial-year-2019-2020 https://www.befiler.com/blog/how-do-i-become-a-tax-filer-in-pakistan https://www.befiler.com/blog/befilers-role-in-improving-tax-awareness-and-education-in-pakistan https://www.befiler.com/blog/online-tax-filing-culture-in-pakistan https://www.befiler.com/blog/more-incentives-more-reasons-to-become-filer https://www.befiler.com/blog/information-needed-to-file-an-income-tax-return https://www.befiler.com/blog/why-become-filer https://www.befiler.com/blog/register-ntn-in-pakistan https://www.befiler.com/blog/befiler-your-smart-tax-assistant-for-income-tax-return-filing https://www.befiler.com/blog/?category=22&per_page=10 https://www.befiler.com/blog/?category=7&per_page=10 https://www.befiler.com/blog/?category=21&per_page=10 https://www.befiler.com/blog/?category=18&per_page=10 https://www.befiler.com/blog/?category=20&per_page=10 https://www.befiler.com/blog/?category=17&per_page=10 https://www.befiler.com/blog/?category=1&per_page=10 Benefits of tax filing as business individual what is an llc and what are the benefits of llc registration importance of trademark for your business what are taxes and why are they important for the economy benefits of becoming a tax filer in pakistan how to register your company online with befiler last date of tax filing for year 2022 lets talk about ntn why should you register for it the last date for submitting income tax returns 2022 documents required for filing income tax returns in pakistan