Why was it decided to make this change to the stock option tax system?

The earlier announced position had been to require employers to track their foreign employees when they leave the country until they exercise their stock options. However, after wide consultation with companies and tax practitioners on the implementation of this measure, it was found that tracking employees would be onerous, increase business costs, and be very difficult to effect.

This ''deemed exercise'' rule simplifies the process for both employers and employees, while assuring the stock option holders that they will not be worse off. If the gains when the foreign employees actually exercise their options later on are lower than what was deemed, they can ask IRAS to refund the difference.