Frequently Asked Questions (FAQs)

Company filing


Q1. What is an Exempt Private Company (EPC)?

An EPC is a private company which has at most 20 shareholders. No corporation holds (directly or indirectly) any beneficial interest in the EPC's shares.

Q2. If an Exempt Private Company (EPC) has already filed an Annual Return to ACRA, does it still need to file any documents to IRAS?

Notwithstanding the filing of Annual Return to ACRA, an EPC must also file its Income Tax Return (Form C / Form C-S), accounts and tax computations to IRAS.

Q3. What does Dormant Exempt Private Company (EPC) in the Annual Return mean?

This is an EPC that does not have any accounting transactions or business activities for the financial year in question or have not commenced business since incorporation as defined under section 205B Companies Act.

Q4. What does Normal Exempt Private Company (EPC) in the Annual Return mean?

This is an EPC whose annual revenue are more than S$5 million for financial year starting on or after 1 June 2004; or $2.5 million for financial year starting on or after 15 May 2003. Such EPC is not exempted from audit requirement.

Q5. Do sole-proprietors and partnerships need to file accounts in XBRL format?

Sole-proprietors and partnerships are not required to file accounts.

Q6. Must a company appoint a company secretary?

Yes. The office of secretary shall not be left vacant for more than 6 months at any one time.

Q7. Must a company appoint a company auditor?

Yes. However, a company which is exempted from audit requirements is not required to appoint an auditor.

Q8. If my company has one director and one shareholder left, is it compulsory to amend my M&AA?

It is not compulsory to amend the M&AA. However, you may engage a professional firm to examine if the M&AA contains any provisions that are inconsistent with having only one director and shareholder.

Q9. Can I apply for a company name which is similar to another company name?

If the proposed name is found to be similar or identical to another name on the ACRA register, the name will be rejected.

Q10. If a company has been struck off, can I use the same name?

Yes. The name will be available 15 years after the company has been struck off.

Q11. How do I convert my business to company ?

You would have to retain the exact business name for use in the company name. You would also have to undertake to terminate the business firm upon incorporation by indicating the business name and business registration number in the company name application form.

Q12. Can I extend the reservation period of my approved company name after the expiry date?

No, the name reservation period can only be extended if the application is submitted before the expiry date. A fee of $10 is payable and only one extension is allowed.

Q13. When is the last day I must incorporate the company after it has been approved?

The company name is reserved for 60 days from the date of application. You will need to incorporate the company by the 60th day from the date of application.

Q14. If my proposed name is rejected by your system, what options do I have?

You can either submit another name or appeal for the proposed name by stating a valid reason. The appeal will take approximately 3 working days for the outcome of the appeal to beknown. The appeal fee is $15 and this fee is non-refundable if the appeal is rejected.

Q15. Do we need to register the company's Chinese name with ACRA?

You are only required to register the business name in English.

Q16. I had a business firm which is no longer live. Can I use the same name to register a new business?

Yes, you can re-register the business using the same name. This is on condition that the previous owners of the business firm are the same owners of the new business firm.

Q17. Common requirements from the Companies Act.

Companies are required to hold an AGM in every calendar year, not more than 15 months from the preceding AGM and within 18 months from the date of its incorporation. - Section 175 (1)

Within one month after the AGM, the company must file its annual returns with ACRA. - Section 197 (4)

Financial statements laid at the AGM must be done up to a date not more than six months (for private limited companies) or four months (for public-listed companies) before the AGM. - Section 201 (1)

Companies must update ACRA on any changes to their registered office address. Any changes to the address should be lodged within 14 days. - Section 143 (1)

Companies are required to lodge with ACRA any changes to, or movement of, officers (resignation/new appointment), as well as their particulars within one month. - Section 173 (6)

Any director or officer of a company who has changed his residential address must inform ACRA within one month. - Section 173 (7)

Companies are to display the company’s name and registration number in legible romanised letters on all business letters, statements of accounts, invoices and other official documents. - Section 144

Company officers should not make or authorise false statements, or misleading information, in any official material. Wilful omission of information that may cause an official document to be misconstrued is also an offence. - Section 401 (2A)

Any person declared bankrupt cannot act as a director and manage the company directly or indirectly, except with the leave of the court or with the written permission of the official assignee. If a director faces such a disqualification, the company must lodge the director’s disqualification with ACRA within one month from the date the director was adjudged a bankrupt. Alternatively, he can lodge a notice of self-cessation as director. - Section 148

Businesses should not use the words “private”, “sendirian”, “limited” and “berhad” or in any way portray that the business is registered or incorporated as a company. - Section 405



Income Tax - Productivity And Innovation Credit (PIC)


Q18. Who is eligible for PIC?

All businesses are eligible for PIC, if they have incurred expenditure in any of the six qualifying activities.

Singapore registered branches and subsidiaries of a foreign parent or holding company are also eligible for PIC.

Q19. Do investment holding companies qualify for PIC?

Investment holding companies do not qualify for PIC as they do not carry on a trade or business for tax purposes. These companies own investments such as properties and shares for long term investment and derive investment income such as dividend, interest or rental.

Q20. Do service companies qualify for PIC?

A service company is one which renders services to/on behalf of its related companies.

Service companies that derive arm’s length fees will qualify for PIC. These companies will need to prepare their tax computations under the normal tax rules. If a service company wishes to elect for cost plus mark-up basis of assessment, the company will not qualify for PIC. This is because an acceptance of mark-up as the chargeable income of the company is net of all available deductions and allowances (including PIC).

Q21. What is the qualifying period for PIC?

The PIC scheme is effective for eight years from YA 2011 to YA 2018.

Q22. Will qualifying expenditure that is fully or partially funded by the Government or a statutory board qualify for PIC?

The enhanced deductions/allowances under the PIC scheme is computed based on qualifying expenditure net of the grant or subsidy received.

Q23. Should GST be included as part of the qualifying cost incurred for the purpose of claiming PIC?

For a GST-registered business, the qualifying cost incurred for the purpose of claiming PIC should exclude any GST that is claimable as input tax.

For a non-GST registered business, the GST component can be included as part of the qualifying cost.

Q24. Does PIC apply to companies that are taxed at the concessionary rate?

Yes. Even though the income is taxed at concessionary rate, PIC will be applicable as long as the company incurs qualifying expenditure during the basis period for YA 2011 to YA 2018.

Q25. How long am I required to keep the supporting documents for my claims under PIC?

The existing record keeping requirements for businesses apply. You are required to maintain all the supporting documents such as invoices for a period of 5 years.

Q26. What are the qualifying expenditure for investment in automation equipment?

The purchase and leasing of PIC IT and Automation Equipment qualify for PIC.

The expenditure cap is applied to both expenditure incurred on acquisition and leasing of PIC IT and Automation Equipment.

Q27. Can installation costs incurred on the automation equipment qualify for PIC?

If the installation costs (for example site preparation, delivery, assembly costs, etc) have been incurred as part of the costs of acquiring the equipment, they would qualify for PIC.

Q28. Do I need to apply for my equipment to be considered as PIC IT and Automation Equipment, so that it can qualify for PIC?

No. There is no need to make any application for the equipment to be considered as PIC IT and Automation Equipment. You can make a claim for PIC as long as the equipment falls within the PIC IT and Automation Equipment List.

Q30. For subsequent purchases of similar equipment (whether for replacement or as an additional acquisition) which IRAS had previously approved for PIC on a case-by-case basis, do I still need to submit another application to have the new equipment approved for PIC?

Yes, you are still required to submit another application to have your new equipment approved for PIC even though IRAS had previously approved a similar equipment for PIC. This is necessary because each application is assessed based on whether the equipment met the criteria.

Q32. Will equipment purchased for use overseas by the company itself or persons other than the company (e.g. subcontractor) qualify for PIC?

The company will qualify for PIC benefits if the PIC IT and Automation Equipment is used by the company for the purpose of its trade or business.

Where the PIC IT and Automation Equipment is placed with an overseas subcontractor in an outsourcing arrangement for the purpose of providing manufacturing services to the company, the cost incurred by the company to purchase the equipment will qualify for PIC if:

- the equipment is used exclusively for the manufacture of the company’s products; and

- the company maintains control over the equipment used by the subcontractor (including maintenance of the equipment).

Q33. Will I qualify for PIC if I lease PIC IT and Automation Equipment for use in my business?

Yes. The lease payment incurred on PIC IT and Automation Equipment will qualify for PIC provided the equipment is not onward leased to another party during the same basis period.

Q34. Will equipment under a sale and lease-back arrangement qualify for PIC?

Expenditure incurred in respect of equipment under a sale and lease-back arrangement would not qualify for enhanced deduction if capital allowance has previously been allowed for that equipment prior to the sale and lease-back arrangement.

Q35. What are some examples of automated kitchen equipment falling under item 22 of the PIC IT and Automation Equipment List - “Automated kitchen equipment for the purpose of food processing, food preparation or for food and beverage-related operations”?

Examples of automated kitchen equipment under item 22 include:

- Automatic deep fryer/noodle boiler/wok

- Automatic meat slicer

- Automatic packaging machine

- Blast chiller/freezer

- Combi oven

- Dishwasher

- Stone milling machine used to grind ingredients into paste/sauces

- Vacuum sealing machine

- Vegetable cutting/peeling machine

Q36. Does item 35 of the PIC IT and Automation Equipment List apply only to the building and construction industry - “Construction equipment proposed and supported by the Building and Construction Authority”?

No. The list of equipment under item 35 is not restricted to the building and construction industry. As long as the equipment is listed under item 35 and used in the business (albeit not related to building and construction), it can qualify for PIC.

Q38. Will expenditure incurred on cloud computing qualify for PIC?

Yes, expenditure incurred on procuring cloud computing services will qualify for enhanced deduction for PIC purposes.

Payments for cloud computing are payments for services, withholding tax would apply if such payments are made to non-residents for services rendered in Singapore.

Q39. Will expenditure incurred on upgrading of software fall under PIC IT and Automation Equipment?

Yes, expenditure incurred on software upgrades qualifies for enhanced allowance.

Q40. Will expenditure incurred on leasing of office system software qualify for PIC?

Yes, expenditure incurred on leasing of office system software will qualify for enhanced deduction.

Q41. Do fees paid for maintenance of software qualify for PIC?

Payments for maintenance of software (e.g. debugging, helpdesk support) will not qualify for PIC. You can continue to claim deduction of such maintenance fees under the current rules.

Q42. Can my business claim enhanced allowance on the development of software in Singapore?

If the software is developed for business use, enhanced allowance can be claimed on the development costs.

Q43. Can website development costs and web hosting fees qualify for PIC?

For website development costs:

From YA 2014 to YA 2018 - PIC benefits may be claimed on capital expenditure incurred on developing a website, including costs incurred for the one-time registration of a domain name for the website.

From YA 2011 to YA 2013 - Website development costs do not qualify for PIC benefits. However, if you are able to give a breakdown of the website development costs, PIC benefits may be granted on costs incurred for software application and hardware such as server, which are included in the PIC list.

For web hosting fees:

Fees paid for web hosting services do not qualify for PIC benefits. However, if you are able to provide a breakdown of the web hosting fees, PIC benefits may be granted on costs incurred for the acquisition/leasing of PIC IT and Automation Equipment such as software and server.

Q44. What training expenditure can qualify for enhanced tax deduction under PIC?

The qualifying training expenditure are:

a) Outsourced training – course fees paid to the external training service provider.

b) In-house training (conducted by the employees of the businesses) - expenditure incurred in relation to the provision of:

i) Workforce Skills Qualification (WSQ) training courses accredited by the Singapore Workforce Development Agency (WDA) and conducted by a WSQ in-house training provider;

ii) courses approved by the Institute of Technical Education (ITE) under the ITE Approved Training Centre scheme; or

iii) on-the-job training by an on-the-job training centre certified by ITE.

For YA 2012 to YA 2018, qualifying training expenditure incurred on in-house training not accredited by the Workforce Development Agency (WDA) or approved/certified by the Institute of Technical Education (ITE) will also qualify for enhanced deduction under PIC, subject to a cap of $10,000 for each YA. The claim must still be within the overall expenditure cap on training.

Q45. What are some examples of internal training that qualify for PIC without the need for external certification?

Some examples of internal training that may qualify for PIC without external certification are:

- Training on the operation of specialised equipment(s) with the help of instruction manuals;

- Training on a business’ operating processes and functions in a group setting, with prepared materials and handouts;

- Training to help develop necessary skill sets such as regular sessions on customer service.

Spontaneous consultation, day-to-day problem solving or meetings and coaching/mentoring sessions between supervisors and subordinates will not qualify for PIC.

Q46. Do training costs pertain only to local employees or all employees?

The qualifying training costs include training cost incurred for training of all employees i.e. both local and foreign employees.

Q47. Do training costs incurred for overseas trainings or seminars qualify for PIC?

Yes, there is no restriction on where the training is conducted.

Q48. What are the allowable training costs for courses conducted by external training provider?

For external training courses, training fees paid to the external training provider qualify for the enhanced deduction under PIC. This includes registration or enrollment fees, examination fees, tuition fees and aptitude test fees. Rental expenses for external training premises, meal and refreshments provided during the courses, training materials and stationery separately incurred would also qualify for enhanced deduction under PIC.

However, expenses such as accommodation, travelling and transportation expenditure incurred by the employees attending the course will not qualify for PIC.

Q49. When computing the enhanced deduction on training expenditure, should the qualifying expenditure incurred be net of Absentee Payroll funding?

No, there is no need to deduct the Absentee Payroll funding to arrive at the qualifying expenditure for PIC. This is because the Absentee Payroll funding is given separately to help employers defray the manpower costs incurred on employees attending training.

Q50. Are air fare and accommodation costs of the external trainer allowable for PIC?

Yes, expenses such as hotel accommodation, travelling (e.g. air fare) and transportation expenditure incurred by your business for the external trainer will qualify for PIC.

Q51. The overseas course fees charged by the service provider included accommodation and airfare for my staff attending but there is no breakdown for charges provided in the invoice. Can my company claim the full amount of the billing under PIC?

No, staff accommodation and travelling do not qualify for enhanced deduction. If there is no breakdown of the fees incurred, you may use the market rate for accommodation and airfare to compute the disallowable amount.

Q52. For outsourced training, must the external trainer be a certified trainer?

There is no specific requirement for the external trainer to be a certified trainer.

Q53. My holding company conducts training for my employees. Is this considered in-house or outsourced training and will the training expenses qualify for PIC?

Your holding company is considered an external training service provider. Qualifying training expenses in relation to training of your employees will qualify for PIC.

Q54. If I need to send my employees for training to use a software that I have recently purchased, will the training expenses incurred qualify for PIC?

The course fees paid to the external training service provider will qualify for the enhanced deduction under PIC.

Q56. My employees have undergone an examination that required self-study but no training was involved. Can my business claim PIC on the examination fees incurred?

From YA 2014 to YA 2018, examination fees with no training involved will qualify for PIC as long as there is an element of self-study on the employees’ part and the fees were incurred for the claimant’s trade or business.

Q57. Can training costs incurred by a sole-proprietor/partner qualify for PIC?

Training fees incurred by a sole-proprietor/partner do not qualify for tax deduction under the PIC scheme as a sole proprietor/partner except for non-equity salaried partner*, is a business owner and not an employee. Such expenditure, being personal and private in nature, is not deductible as a business expense.

* A non-equity salaried partner who is under a contract of services is considered an employee.

Q58. We are a agency company and we provide training to our agents who are not our employees. Will the training costs that we incurred qualify for PIC?

From YA 2012 to YA 2018, qualifying training expenditure incurred on the following prescribed classes of individuals engaged by the business to carry on its trade will qualify for PIC:

- Salespersons registered under the Estate Agent Act;

- Representatives within the meaning of the Financial Advisers Act;

- Representatives within the meaning of the Securities and Futures Act; and

- Insurance agents of insurers licensed under the Insurance Act.

Q59. What is the scope of IPRs for the purpose of claiming enhanced Writing-Down Allowance (WDA) over 5 years under PIC?

The scope of IPRs under PIC covers patents, copyrights, trademarks, registered designs, geographical indications, lay-out designs of integrated circuit, trade secrets or information with commercial value (excluding customer-based intangibles and documentation of work processes) and plant varieties.

To be eligible for WDA under PIC, the transferee (i.e. business that acquires the IPR) must acquire the legal and economic ownership of the IPR from the transferor (i.e. person who sells the IPR to the transferee). Legal ownership means the legal assignment of the IPR is granted to the transferee. Economic ownership means the future economic benefits attributable to the IPR will accrue to the transferee.

Q60. Does sole-proprietorship qualify for enhanced allowance or cash payout for IPR acquisition?

No. Sole-proprietorships do not qualify for claim of allowance under Section 19B of the Income Tax Act. Hence, the cash payout option is also not applicable to them.

Q61. Can the amount of enhanced WDA on IPRs acquired be claimed in one year?

No. The current tax treatment under Section 19B is for the costs of IPRs to be written down over 5 years.

Q62. Must I claim enhanced WDA on the full cost of the IPR on a “per IPR basis”?

Generally, enhanced WDA is granted on the full cost of the IPR. However, if the total expenditure incurred on the acquisition of the IPR exceeds the cap, you can claim enhanced WDA on the partial cost of one IPR.

However, if you opt to convert the qualifying expenditure into cash, partial conversion is not allowed and conversion has to be done on a “per IPR basis” up-front in the year of IPR acquisition on the full cost of the IPR.

Q64. What are the IPRs that will qualify under “In-licensing of IPR”?

The qualifying IPRs are patents, copyrights, registered designs, geographical indications, lay-out designs of integrated circuits, trade secrets or information with commercial value (excluding customer-based intangibles and documentation of work processes) and plant varieties.

Q65. What are the qualifying IPR in-licensing costs?

Qualifying costs are license fees incurred on the licensing of qualifying IPRs.

Expenditure incurred for the transfer of ownership of any those rights and legal fees and other incidental costs arising from the licensing of such rights will not qualify for PIC.

Q66. Can the licensee claim PIC benefits if it in-licenses qualifying IPR from a related party?

No. The licensee cannot claim PIC benefits if it licensed the IPR from a related party:

- who carries on a trade or business in Singapore; and

- the qualifying IPR is acquired or developed (in whole or in part) by the related party during the basis period relating to YA 2011 or any subsequent YA.

Q67. What can be claimed as registration cost for enhanced deduction?

Registration cost is broadly divided into two categories, official fees and professional fees.

a) Official fees refers to payments made to the Registry of Patents, Registry of Trade Marks, Registry of Designs or the Registry of Plant Varieties in Singapore or elsewhere for:

i) filing of an application for a patent, registration of a trade mark or design, or for grant of the protection of a plant variety;

ii) search and examination report on the application for a patent;

iii) examination report on the application for grant of protection for a plant variety; or

iv) grant of a patent.

b) For Professional fees, it must be incurred in relation to the registration of the qualifying IPRs and will cover payments made to any person acting as an agent for:

i) applying for any patent, registration of a trade mark or design, or for the grant of protection of a plant variety, in Singapore or elsewhere;

ii) preparing specifications or other documents for the purpose of the Patents Act (Cap. 221), the Trade Marks Act (Cap. 332), the Registered Design Act (Cap. 266), the Plant varieties Protection Act (Cap. 232A) or the intellectual property law of any other country in respect of patents, trademarks, designs or plant varieties; or

iii) giving advice on the validity or infringement of any patent, trade mark, design or plant variety.

Q68. If I am not successful in my application to get the trademark or patent registered, can I still qualify for PIC?

Yes. The enhanced deduction is granted regardless of the outcome of the application as long the business has incurred the registration cost.

Q69. Do renewal costs for trademarks qualify for enhanced deduction PIC?

No. Only the cost of registration allowable under Section 14A qualifies for enhanced deduction. Renewal cost for trademarks is an allowable deduction under Section 14(1) if it is wholly and exclusively incurred in the production of income.

Q70. Is there a minimum ownership period of the IPR?

You are required to hold the IPR for a minimum period of one year from the date of filing of the IPR.

Q71. Can I apply for waiver of the claw-back provision if I disposed of the IPR within a year?

No, the waiver of claw-back provision does not apply to registration or disposal of IPRs.

Q72. What is the definition of R&D?

Under Section 2 of the Income Tax Act, R&D means any systematic, investigative and experimental study that involves novelty or technical risk carried out in the field of science or technology with the object of acquiring new knowledge or using the results of the study for the production or improvement of materials, devices, products, produce, or processes, but does not include —

- quality control or routine testing of materials, devices or products;

- research in the social sciences or the humanities;

- routine data collection;

- efficiency surveys or management studies;

- market research or sales promotion;

- routine modifications or changes to materials, devices, products, processes or production methods;

- cosmetic modifications or stylistic changes to materials, devices, products, processes or production methods; or

- (Not applicable from YA 2012 onward) development of a computer software that is not intended to be sold, rented, leased, licensed or hired to 2 or more persons who are not related parties to each other and to the person who develops the software or on whose behalf the development of the software is undertaken.

Q73. My business undertakes a number of R&D projects. Is the expenditure cap applied on each of the R&D project or on the entire R&D amount incurred for the YA?

The cap is on the total amount incurred on qualifying R&D expenditure for the YA regardless of the number of projects handled by the business.

Q74. What are the qualifying R&D expenditure for the purpose of claiming enhanced tax deduction under PIC?

The qualifying R&D expenditure for the purpose of claiming enhanced tax deduction under PIC are R&D expenditure incurred on R&D projects carried out in Singapore or overseas, if the R&D done overseas relates to the taxpayer’s Singapore trade or business.

Qualifying expenditure refer to staff costs, consumables and any such expenditure prescribed by the Minister. The R&D expenditure also has to be computed net of subsidy and grant received from the Government or statutory board.

Q75. What are consumables?

Consumables refer to any materials or items used in the research and development which, upon such use, are consumed or transformed in such a manner that they are no longer useable in their original form.

Consumables exclude utilities.

Q76. For out-sourced R&D, how is the enhanced deduction under PIC computed?

For out-sourced R&D activities, 60% of the total payments made to the R&D organisation will be deemed as qualifying staff costs and consumables allowed for enhanced deduction.

Where more than 60% of such payments are made up of staff costs and consumables, enhanced deduction based on the actual percentage of staff costs and consumables incurred is allowed.

Q77. What is the cash payout?

To support small but growing businesses which may be cash-constrained in innovating and improving productivity, eligible businesses can opt to convert qualifying expenditure to a non- taxable cash payout subject to a cap (cash payout cap) as follows:

- For YA 2011 to YA 2012 – $200,000 over 2 YAs combined at Cash Payout Rate of 30% (Maximum Payout is $60,000 over 2 YAs)

- For YA 2013 to YA 2018 – $100,000 per YA at Cash Payout Rate of 60% (Maximum Payout is $60,000 per YA)

Q78. What is the qualifying period for the cash payout?

The cash payout option is available from YA 2011 to YA 2018.

Q79. How is the cash payout cap applied?

For sole-proprietorships and companies (including registered business trusts), the cap is applied at the individual or company level; for partnerships, the cap is applied at the partnership level.

Q80. What is the maximum amount of cash payout I can receive?

For YA 2011 and YA2012, you can convert qualifying expenditure up to $200,000 (but not less than $400 for each YA) taken together for the 2 YAs at the rate of 30% for all six qualifying activities. The total cash payout is $60,000 for two YAs combined.

For YA 2013 to YA 2018, you can convert qualifying expenditure up to a cap of $100,000 for each YA (but not less than $400) for all six qualifying activities taken together at the cash conversion rate of 60%. The total cash payout is $60,000 for each YA.

Q81. Who is eligible to apply for the cash payout?

Sole-proprietorships, partnerships and companies (including registered business trusts) are eligible as long as they:

i) incurred the qualifying expenditure and are entitled to PIC during the basis period for the qualifying YA;

ii) have active business operations in Singapore; and

iii) employ at least 3 local employees (Singapore Citizens or Permanent Residents with CPF contributions) excluding sole-proprietors, partners under contracts for service and shareholders who are directors of the company.

Q83. Do I need to make CPF contributions on my local employees for all 12 months of each YA?

No, these contributions do not need to be made for all 12 months of the YA. To qualify for the cash payout, businesses must have contributed CPF on the payroll of at least 3 local employees as follows:

- For YA 2011 to YA 2012 – In the last month of the basis period for the qualifying YA.

- For YA 2013 to YA 2015 – In the last month of the quarter or combined consecutive quarters to which the cash payout option relates.

- For YA 2016 to YA 2018 – For all three months in the quarter or last three months of the combined consecutive quarters to which the cash payout option relates.

Q84. I have incurred wage costs on both my Singaporean and non-Singaporean employees. Am I eligible to apply for the cash payout?

Only employees who are Singaporeans and Permanent Residents will be considered when determining the number of qualifying local employees. Your non-Singaporean employees will not be taken into consideration.

Q85. I have both full- time and part- time employees. Am I eligible to apply for the cash payout?

Both full-time and part-time employees who are Singaporeans and Permanent Residents will be considered when determining the number of qualifying local employees.

The following groups of people are excluded when determining the number of qualifying employees for the purpose of cash payout:

- Self-employed (this includes a sole proprietor and partner under contract for service)

- Shareholder who is also a Director of the company (as defined in Section 4(1) of the Companies Act).

Q86. I am self-employed and have contributed to my Medisave Account. Am I considered an employee of the business?

No. As you are self-employed, you are the owner of the business and thus cannot be considered as an employee of the business. The eligibility of a business to claim the cash payout is based on the number of employees who are not business owners.

Q87. Is the cash payout taxable?

No, the cash payout is not taxable.

Q88. Can I convert the qualifying expenditure under PIC into a cash payout if my business still has taxable income?

Yes. However the qualifying expenditure available for computing enhanced allowances/ deductions will have to exclude the qualifying expenditure elected to be converted into a cash payout.

Q89. Is partial conversion of the qualifying expenditure into cash payout allowed?

Partial conversion is allowed for qualifying expenditure relating to leasing of PIC IT and Automation Equipment, in-licensing of qualifying IPRs, training, design project and research and development.

Partial conversion is not allowed for qualifying expenditure relating to purchase of PIC IT and Automation Equipment, registration and acquisition of IPRs.

Q90. Can PIC IT and Automation Equipment acquired on hire purchase (HP) qualify for cash payout?

YA 2012 to YA 2018 - Businesses can opt for cash payout on assets purchased under HP agreements signed during the basis period for YA 2012 to YA 2018, with repayment schedule straddling two or more financial years.

To qualify for cash payout, the business must contribute CPF on the payroll of at least 3 local employees:

- For YA 2012 – in the last month of the basis period in which the hire purchase agreement is signed.

- For YA 2013 to YA 2015 – in the last month of the quarter or combined consecutive quarters in which the hire purchase agreement is signed.

- For YA 2016 to YA 2018 – for all three months in the quarter or last three months of the combined consecutive quarters in which the hire purchase agreement is signed.

YA 2011 - The cash payout option is not available for assets purchased under HP agreements (with repayment schedule straddling two or more basis periods) signed during the basis period for YA 2011.

Q91. Can I claim tax deductions or allowances in my income tax return after the expenditure has been converted into a cash payout?

No. Once you have elected to convert the qualifying expenditure into a cash payout, you cannot claim tax deductions or allowances on the encashed expenditure.

Q92. When do I apply for the cash payout?

Businesses can apply for the cash payout after the end of any financial quarter(s) in the business’ financial year, but no later than the filing due date of the income tax return for each YA.

Q93. My business’ financial year ended on 31 Mar 2014 (YA 2015). When can I apply for the cash payout? If so, when will I receive the cash payout?

From YA 2013, businesses can apply for cash payout on a quarterly or combined consecutive quarters basis. This means that you can apply for cash payout by submitting the PIC Cash Payout Application Form anytime after the end of your financial quarter(s), but not later than the income tax return filing due date of the relevant YA (15 Apr for sole-proprietorship and partnership; 30 Nov for company).

Q94. I am submitting my company’s Estimated Chargeable Income (“ECI”) soon. Do I have to submit any forms (for purposes of PIC) together with the ECI?

You do not need to submit the PIC Cash Payout Application Form together with your company’s ECI. If you are claiming the enhanced tax deductions or allowances under PIC, the claim should be made in the tax computation for the relevant YA.

Q95. Can I submit a facsimile copy of the Cash Payout Application Form to IRAS?

No, only the hard copy of the original form, signed by the authorised person and sent to IRAS, will be accepted.

Q96. If I have more than one sole-proprietorship, how many claim forms must I submit?

You only need to submit one claim form for all your sole-proprietorships as the cash payout is capped at the sole-proprietor level.

Q97. When will I receive the cash payout?

You will receive the cash payout within 3 months from the date IRAS receives the completed PIC Cash Payout Application form and the relevant documents.

Q98. Under what circumstances do I have to repay the cash payout?

You are required to own the automation equipment and/or IPRs for which the cash payout has been made, for at least 1 year from the date of acquisition of the automation equipment; or acquisition of the IPR; or filing of the IPR (whichever is applicable).

If you lease/dispose of your acquired IPRs within two to five years, you will need to repay the cash payout proportionately.

Q99. Is there a penalty for disposing a piece of equipment for which cash payout was claimed within the holding period?

Besides the recovery of cash payout, no penalty will be imposed if you inform IRAS of the disposal within 30 days from the date the equipment is disposed. However, penalties will be imposed for late notification and non-compliance.

Q100. What is the qualifying period for the PIC+ scheme?

The PIC+ scheme is available from Year of Assessment (YA) 2015 to YA 2018.

Q101. What are the tax benefits under the PIC+ scheme?

Under the PIC+ scheme, qualifying SMEs that incur PIC qualifying expenditure beyond the current combined expenditure cap of $1.2 million per activity from YA 2013 to YA 2015 and from YA 2016 to YA 2018 can enjoy enhanced tax deductions/allowances on an additional $200,000 in expenditure (“additional qualifying expenditure”) for each qualifying activity per YA. This brings the expenditure cap for qualifying SMEs from $400,000 to $600,000 for each qualifying activity per YA.

Q102. Is the expenditure cap for PIC cash payout enhanced with the introduction of the PIC+ scheme?

No, the expenditure cap for PIC cash payout remains unchanged at $100,000 for all six activities per YA.

Q103. Can the additional qualifying expenditure under the PIC+ scheme be converted into PIC cash payout?

Yes. The additional qualifying expenditure under the PIC+ scheme can be converted into cash, subject to the existing conditions for making a PIC cash payout claim.

Q104. My business is in a tax loss position after claiming enhanced tax deductions/allowances on the additional qualifying expenditure under the PIC+ scheme. How can my business benefit from this?

Any deduction/allowance that cannot be fully utilised in any 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. These unutilised trade losses/allowances can also be:

- Carried forward to offset against the business income of future YAs subject to the shareholding test and business continuity test as per current tax rules;

- Carried back to the immediate preceding YA to offset against the prior year income under the loss carry-back relief system;

- Transferred to and offset against the income of a related Singapore company under the group relief system.

Q105. Who is eligible for the PIC+ scheme?

SMEs qualifying for the PIC+ scheme are sole-proprietorships, partnerships and companies that are carrying on trade or business. They must also meet the following conditions:

If the business is part of a group:

- Group revenue of not more than $100 million for the relevant basis period for the YA (“revenue” condition); or

- Group employment size of not more than 200 employees as at the last day of the relevant basis period (“employment size” condition).

If the business is not part of a group:

- Revenue of not more than $100 million for the relevant basis period for the YA (“revenue” condition); or

- Employment size of not more than 200 employees as at the last day of the relevant basis period (“employment size” condition).

Q106. How is the PIC+ eligibility criteria determined for sole-proprietors, partnerships and Singapore branches of foreign companies that are carrying on a trade or business in Singapore?

Sole-Proprietor/Partnership:

Where the owner of the sole-proprietor or controlling partner of the partnership is an individual, the PIC+ eligibility criteria will be applied:

- In the case of a sole-proprietor – at the individual level by aggregating all the sole- proprietorship businesses carried on by that individual

- In the case of a partnership – at the partnership level.

Singapore Branch:

A head office together with all its branches form a single legal entity. For a Singapore branch to qualify for PIC+, the combined revenue of the head office and all its branches must not exceed $100 million or the combined employment size of the head office and all its branches must not exceed 200 employees. The criteria will be applied at the group level if the head office is part of a group.

Q107. My business would like to utilise PIC+ and claim PIC on qualifying expenditure incurred during financial years ending Dec 2014 (YA 2015) and Dec 2015 (YA 2016). What is the relevant period(s) for which the “revenue” condition or “employment size” condition must be met to be eligible for PIC+?

The PIC+ expenditure cap is combined for YA 2013 to YA 2015, and for YA 2016 to YA 2018.

For YA 2015, the business must meet the “revenue” or “employment size” condition in YA 2015.

For YA 2016 to YA 2018, once your business meets the “revenue” or “employment size” condition in any of the YAs, your business will be able to enjoy the tax benefits under PIC+ from that YA onwards, even if it fails to meet the eligibility criteria in subsequent YAs.

Q108. Can I elect for PIC cash payout on the additional qualifying expenditure allowable under PIC+ on a quarter or combined consecutive quarter(s) basis in YA 2015?

Yes, you have the option of electing for PIC cash payout on a quarter or combined consecutive quarter(s) basis, as per existing rules. However, if at the point of election, you are unable to determine whether your business meets the PIC+ eligibility criteria, the PIC cash payout election can only be made after confirmation of your PIC+ eligibility.

Q109. Can I still claim PIC if I do not meet the qualifying conditions for the PIC+ scheme?

Yes, you can continue to claim for the existing tax benefits under the PIC scheme:

Enhanced deductions/allowances on up to $400,000 of qualifying expenditure for each activity per YA. The annual expenditure cap of $400,000 may be combined as follows:

For YA 2013 to YA 2015 combined – $1,200,000 for each qualifying activity.

For YA 2016 to YA 2018 combined – $1,200,000 for each qualifying activity.

Convert up to $100,000 of qualifying expenditure in all six activities per YA into a cash payout.

Q110. Do I need prior approval before claiming PIC+?

No. There is no need to seek prior approval from IRAS.

Q111. How do I make a claim for PIC+?

There is no need to submit a separate application for PIC+.

Q112. Do I need to make CPF contributions to my local employees for all 12 months of each Year of Assessment (YA)?

No, these contributions do not need to be made back-to-back on consecutive months for the entire YA. To qualify for the PIC Bonus, businesses must have contributed CPF on the payroll of at least 3 local employees:

- Where 400% tax deductions/allowances on qualifying PIC expenditure is claimed – in the last month of the basis period for the YA to which the deduction/allowance relates.

- Where PIC cash payout on qualifying PIC expenditure is claimed – in the last month of the quarter or combined consecutive quarters to which the cash payout option relates.

Q113. I have incurred wage costs on both my Singaporean and non-Singaporean employees. Am I eligible to apply for the PIC Bonus?

Only employees who are Singaporeans and Permanent Residents will be considered when determining the number of qualifying local employees. Your non-Singaporean employees will not be taken into consideration.

Q114. I have both full-time and part-time employees. Am I eligible to apply for the PIC Bonus?

Both full-time and part-time employees who are Singaporeans and Permanent Residents will be considered when determining the number of qualifying local employees.

The following groups of people are excluded when determining the number of qualifying employees for the purpose of the PIC Bonus as they are business owners:

- Self-employed (this includes a sole proprietor and partner under contract for service)

- Shareholder who is also a director of the company (as defined in Section 4(1) of the Companies Act).

Q115. Why are other entities such as town councils, clubs, and associations excluded from the PIC Bonus?

Under the PIC scheme, all taxpaying entities can claim 400% tax deductions/allowances on PIC qualifying expenditure. The cash conversion option is however available only to companies, partnerships and sole proprietorships with at least 3 local employees.

Q116. Will companies that have ceased business operations qualify for the PIC Bonus?

No, companies are not eligible for PIC Bonus if they have ceased business operations at the point IRAS processes their PIC Bonus.

Q117. How is the PIC Bonus amount computed?

The PIC Bonus is given on a dollar-for-dollar matching basis. This means that for every dollar your business spends on PIC-qualifying activities, your business will receive a PIC Bonus of a dollar, subject to a cap of $15,000 in total for YAs 2013 to 2015.

Q118. How frequently can I apply for the PIC Bonus when I have purchased at least $5,000 in productivity and innovation-related investments?

The number of times businesses can seek claims on the PIC Bonus is:

- Once a year if 400% tax deductions/allowances is claimed; and

- Up to four times a year if PIC cash payout is claimed.

Q119. Are there restrictions on how I should use the PIC Bonus?

No, there are no restrictions on how you can use the PIC Bonus.

Q120. For PIC IT and Automation Equipment acquired on hire-purchase (HP), is the PIC Bonus computed based on the cost or instalment payments?

PIC Bonus is computed based on the principal sum repaid (the amount that qualifies for PIC benefits) during the basis periods relating to YA 2013, YA 2014 and YA 2015.

Q121. If our company’s hire-purchase repayment schedule extends beyond YA 2015, will we still receive PIC Bonus for payments made after YA 2015?

No, PIC Bonus will not be granted on instalment payments made after the basis period relating to YA 2015.

Q122. Will IRAS recover the PIC Bonus if our company does not meet the minimum ownership period requirement for PIC IT and automation equipment?

Yes. PIC Bonus is granted on top of existing PIC benefits. If the business is no longer eligible for PIC as conditions for granting the benefits are not met (such as the one-year minimum holding requirement for acquisition of PIC IT and automation equipment), the business would likewise not be allowed to keep the PIC Bonus.



Income Tax - Withholding tax


Q123. Payment made to an executive director subject to withholding tax?

Withholding tax is applicable to payment of income made to a foreign individual in his capacity as a non-resident director . For payment of income made to the foreign individual in his capacity as an executive director , the withholding tax procedure is not applicable. Instead, the executive director must report his income in the income tax return.

Q128. The non-resident director is a resident of a country which has a tax treaty with Singapore. If he receives directors' fees from a company resident in Singapore, is he liable to tax in Singapore?

Whether he is liable to tax in Singapore would depend on the provisions in the tax treaty. Generally, director's fees derived from a company incorporated in Singapore is taxable in Singapore.

Q129. Is a non-resident director of a foreign company liable to income tax on director’s fee paid by the foreign company for attending a meeting in Singapore if the foreign company has a subsidiary in Singapore?

No, he will not be liable to Singapore income tax on the director’s fees paid by the foreign company with no presence in Singapore. The foreign company is not considered to have a presence in Singapore through a subsidiary in Singapore.

Q130. Is a non-resident director of a foreign company liable to income tax on director's fee paid by the foreign company for attending a meeting in Singapore if the foreign company has a branch in Singapore?

Yes, he will be liable to Singapore income tax on the director's fees paid by the foreign company as the foreign company is considered to have a presence in Singapore through a branch in Singapore.

Q131. What is the date of payment for director’s fees?

The date of payment is the date they are voted and approved at the company’s Annual General Meeting.

Q132. Must a non-resident director file an income tax return?

No, since the employer has accounted for the withholding tax. The non-resident director must file an income tax return if he has other sources of income.

Q133. I engaged a foreign consultant to render services in Singapore. Will the consultation fees be taxed in Singapore if the fees are paid to the consultant outside Singapore?

Yes. You must withhold tax on the fees paid to the consultant for professional services rendered in Singapore. It does not matter where the consultant is paid.

Q134. I engaged a visiting professional to render services for not more than 60 days in the calendar year in Singapore. Is the income exempt from tax?

The tax exemption for short-term employment of 60 days or less does not apply to visiting non-resident professionals who exercise their profession in Singapore. Only visiting non-resident professionals who are employees would qualify for the exemption.

Q135. I have engaged a non-resident professional to render services in Singapore. He is only provided with airfare and accommodation benefits. Are these subject to withholding tax?

Under the 15% withholding tax treatment, the cost of accommodation (regardless of number of days) and airfare are subject to withholding tax at 15%. Under the option to be taxed at 20% of net income, the cost of accommodation (less than 60 days per year) and airfare are not taxable as a concession.

Q136. My university has invited some non-resident professionals to participate in a seminar in Singapore. We will provide them with per diem, airfare and hotel accommodation. Are they liable to Singapore income tax?

They are liable to Singapore income tax on the per diem, airfare and hotel accommodation provided to you. If their stay in Singapore is 60 days or less in a calendar year, they may elect to be taxed at 20% of net income. Under this option, the airfare and accommodation provided are not taxable as a concession. You only needs to withhold tax at 20% on the amount of per diem paid.

Q138. My non-resident professional received fees for his services rendered in Singapore. Separately, I pay him a retainer fee when he is outside Singapore. Are the payments subject to withholding tax?

The professional fees is subject to withholding tax. As the retainer fees are not income attributable to services performed outside Singapore, it is also subject to withholding tax in Singapore.

Q139. Company purchased goods from a US supplier which imposed interest on credit terms given. Is interest paid on trade financing subject to withholding tax?

Yes, withholding tax is applicable. This is notwithstanding that the interest charged on the goods sold on credit is incidental to the main activity of selling the products.

Q140. A non-resident company took up a loan from another non-resident company through a Singapore-resident company to acquire a vessel. Is the interest paid to the non-resident subject to withholding tax?

If there was only one loan agreement and the Singapore-resident company was not a party to the agreement, i.e., it merely acted as an intermediary, withholding tax is not applicable. However, if there were two separate loan agreements, withholding tax is applicable on the interest payable to the non-resident company since it was borne by a person resident in Singapore.

Q141. Singapore resident company paid interest to a non-resident in respect of a loan obtained for its branch's business in Malaysia. Is the interest subject to withholding tax?

No, since it is in respect of a business carried on outside Singapore through a permanent establishment outside Singapore. This is provided that the interest is not deductible against any income accruing in or derived from Singapore.

Q143. Is a payment made by a Singapore company to a non-resident for the use of software subject to withholding tax?

Under the rights-based approach, payments for the use of software characterised as a copyrighted article are not subject to withholding tax. Payments to non-residents for the use of software chararacterised as a copyright right are subject to withholding tax.

If the software is used by the company for its business operations and the company is not allowed to commercially exploit the copyright of the software, the payment is for a copyrighted article. Withholding tax is not applicable.

If the payment allows the company to commercially exploit the copyright of the software, the payment is for a copyright right and is a royalty. Withholding tax is applicable for payments to non-residents.

Q145. Is a payment for the customisation of software subject to withholding tax?

Withholding tax is applicable if the services are performed in Singapore. However, if the services are rendered outside Singapore, withholding tax is not applicable.

Q147. Must a Singapore branch withhold tax on royalties paid to its head office?

For tax purposes, the branch and head office are treated as separate entities. The Singapore branch has to withhold tax.

Q148. Is payment for the installation of equipment, technical support services and training services provided by a non-resident company subject to withholding tax?

Withholding tax is applicable on the service fees attributable to work done in Singapore. The withholding tax is at the prevailing corporate tax rate on the gross fees. This is not the final tax. If the company wishes to claim for the expenses incurred, they may forward the certified accounts and tax computation for IRAS' examination. When the net income and tax have been determined, any tax withheld in excess of the tax on the net income will be refunded.

Q149. Is reimbursement of accommodation, meals and transportation expenses to a non-resident company subject to withholding tax?

Withholding tax is applicable unless the payer can obtain a detailed breakdown of the expenses showing that the expenses were reimbursed at the actual costs incurred, without any mark-up or profit element.

Q150. Is withholding tax applicable to consultancy fees for services provided by a non-resident via Internet presentation, email and telephone?

Services provided by a non-resident company via electronic means overseas without sending staff to Singapore are considered as services rendered outside Singapore. As such, withholding tax is not applicable.

Q151. Is withholding tax applicable to payments made to a non-resident Head Office for management, administration, human resource and financial services if the amount paid is an allocation or reimbursement of expenses?

No. Withholding tax is not applicable to reimbursement/allocation of management fees (without profit element) between a head office and branches under a cost-pooling arrangement.

Q152. A non-resident derived rental from the letting of his furniture and fittings (not arising from the letting of property) from Singapore. Is the rental income subject to withholding tax?

The rental from letting of furniture and fittings is considered as rental for the use of movable property and thus, you are required to withhold tax at the rate of 15%.

Q153. Should withholding tax in respect of dividend income be in accordance with the rates as specified in the relevant tax treaty or the corporate tax rate?

Singapore currently does not have withholding tax on dividend although withholding tax rates on dividends are provided under the tax treaties.