Productivity and Innovation Credit (PIC) Scheme

The PIC scheme provides enhanced tax benefits from Years of Assessment 2011 to 2018 (FY 2010 to FY 2017) for the following activities:-

  • Acquisition and leasing of PIC Information Technology (IT) and Automation Equipment;
  • Training of employees;
  • Acquisition and In-licensing of Intellectual Property Rights (IPR);
  • Registration of patents, trademarks, designs and plant varieties;
  • Research and development activities; and
  • Design projects approved by DesignSingapore Council.


Some common examples of PIC qualifying expenditure:-

  • Rental of fax machine, printer, computer, and office software
  • Cost of acquiring fax machine, printer, computer, and office software
  • Staff training and course fees
  • Trademark registration fee



1. PIC enhanced tax deduction/ allowance

Companies could claim additional 300% tax deduction/ allowance for PIC qualifying expenditure (net of any government grant and subsidy) on top of the existing 100% base deduction/ allowance. The combined expenditure cap for each of the qualifying activity is as follows:-

  • YA 2013 to YA 2015: Combined expenditure cap of $1,200,000 per qualifying activity
  • YA 2016 to YA 2018: Combined expenditure cap of $1,200,000 per qualifying activity

 

Note: The combined expenditure cap will be $1,400,000 for Years of Assessment 2013 to 2015 and $1,800,000 for Years of Assessment 2016 to 2018 if the company’s annual turnover is not more than $100 million or employment size is not more than 200 workers.



2. PIC cash payout

Companies could make an election to convert PIC qualifying expenditure up to $100,000 into cash at a conversion rate of 60% if the following conditions are met:-

  • incurred qualifying expenditure and are entitled to PIC during the basis period for the qualifying Year of Assessment;
  • active business operations in Singapore; and
  • at least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions in the relevant month(s)) excluding shareholders who are directors of the company. For Years of Assessment 2013 to 2015, the relevant month refer to the last month of the quarter or combined consecutive quarters to which the cash payout option relates. For Years of Assessment 2016 to 2018, the relevant months refer to all the three months in the quarter or last three months of the combined consecutive quarters to which the cash payout option relates.

 

Once the qualifying expenditure is converted to cash, it cannot be claimed as tax deductions.



3. PIC Bonus

On top of the existing PIC enhanced tax deduction/ allowance and PIC cash payout, companies could get a dollar-for-dollar matching cash bonus for Years of Assessment 2013 to 2015, subject to an overall cap of $15,000 for all 3 Years of Assessment combined for PIC qualifying expenditure incurred. The PIC bonus will be granted automatically if the following conditions are met:-

  • incurred at least $5,000 in PIC qualifying expenditure during the basis period for the Year of Assessment in which a PIC Bonus is claimed;
  • active business operations in Singapore; and
  • at least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions) excluding shareholders who are directors of the company.



4. Claw-back provisions

Claw-back provisions will apply to PIC enhanced tax deduction/ allowance and/or PIC cash payout if the following is not met:-

  • PIC automation equipment is owned for at least one year from the date of purchase to the date of its disposal/leasing out.
  • For registration of IPR, it is owned for at least one year from the date of filing to the date of its disposal.
  • For acquisition of IPR, it is owned for at least one year from the date of acquisition to the date of its disposal.


Please contact us if you require our assistance with the PIC cash payout election / enhanced deduction.

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