PIC – Productivity and Innovation Credit Scheme

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Information can be found here –

https://www.iras.gov.sg/irashome/Schemes/Businesses/Productivity-and-Innovation-Credit-Scheme/

What is it?

It is an incentive to encourage businesses in Singapore to innovate and become more productive.

Who is it for?

This scheme is opened to all businesses, including sole proprietorships, partnerships, companies,

registered branches and subsidiaries of a foreign parent or holding company.

The PIC+ Scheme was introduced in Budget 2014 to provide support to small and medium enterprises

(SMEs) who are making more substantive investments to transform their businesses. Under the PIC+

Scheme, the expenditure cap for qualifying SMEs will be increased from $400,000 to $600,000 per

qualifying activity per Year of Assessment (YA).

Qualifying for PIC+ Scheme

Businesses eligible for the PIC+ Scheme are sole-proprietorships, partnerships and companies carrying

on a trade or business in Singapore and whose:

Revenue is not more than $100 million; or

Employment size is not more than 200 employees.

This criteria will be applied at the group level if the business is part of a group.

Eligible businesses are referred to as "qualifying SMEs" henceforth.

What is the scheme?

There are 2 ways to claim PIC.

1. Cash payouts – 40% of qualifying expenditure

OR

2. Tax deductions/Allowances - 400% of Qualifying Expenditure

What are the Qualifying Expenditure?

1. Acquisition and Leasing of PIC IT and Automation Equipment

2. Training of Employees

3. Acquisition and Licensing of Intellectual Property Rights (IPR)

4. Registration of Patents, Trademarks, Designs and Plant Varieties

5. Research and Development (R&D) Activities

6. Design Projects Approved by Design Singapore Council

PIC – Productivity and Innovation Credit Scheme

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At a glance

CASH PAYOUT TAX DEDUCTION/ALLOWANCE

Option to convert up to $100,000 of total spending in

all six activities for each Year of Assessment into a non-

taxable cash payout.

With effect from 1 Aug 2016, the cash payout

conversion rate will be 40% of qualifying expenditure.

From YA 2015 to YA 2018, businesses can enjoy 400% tax

deductions/allowances on up to $600,000 of qualifying

expenditure per year in each of the six qualifying activities.

Condition:

- Carries on active business operations in

Singapore.

- Incurred qualifying expenditure and are

entitled to PIC during the basis period of

qualifying Year of Assessment.

- Meets the 3 local-employee condition

- Minimum qualifying expendition for each cash

payout option application is $400

- For PIC IT and Automation equipment,

equipment to be in use by the business at the

point of electing for cash payout.

Condition:

- Carries on active business operations in Singapore

- Incurred qualifying expenditure and are entitled to

PIC during the basis period of qualifying Year of

Assessment.

YA 2013 to YA 2018 – ie till 31 Dec 2017 to incur

expense

YA 2011 to YA 2018 – ie till 31 Dec 2017 to incur expense

PIC Cash Payout is disbursed only when the qualifying

expenditure has been incurred by the business. An

expense is incurred when the legal liability to pay has

arisen, regardless of the date of actual payment.

If your PIC-qualifying expenditure is incurred before 1

Aug 2016, the 60% cash payout rate will apply

notwithstanding that your PIC cash payout application

may be submitted on or after 1 Aug 2016. You can

submit your cash payout claim anytime after* the end

of your financial quarter, but not later than the income

tax filing due date of the relevant YA.

To Claim:

From 1 Aug 2016, e-Filing of PIC cash payout

applications will be compulsory and hardcopy

application forms will not be accepted on or after this

date. Taxpayers are advised to e-File their PIC cash

payout applications early before the filing due date of

the Income Tax Return.

To Claim:

Declare Enhanced deductions/ allowances in your Income

Tax Return for the relevant YA by the filing due dates.

https://www.iras.gov.sg/irashome/uploadedFiles/IRAS

Home/Schemes/Businesses/Productivity_and_Innovatio

n_Credit_Scheme/Overview%20of%20PIC%20Cash%20

Payout.pdf

Any deduction/allowance that cannot be fully utilised in any

Year of Assessment (YA) will form part of the unutilised

trade losses/allowances of the business.

The unutilised trade losses/allowances can be offset against

other income of the business.

PIC – Productivity and Innovation Credit Scheme

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Illustration on claiming the tax deduction

Illustration of Cash Payout

PIC – Productivity and Innovation Credit Scheme

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