Productivity and Innovation Credit (PIC)

 

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IRAS Announcement

 

From 1 Aug 2016, the following changes to PIC Cash Payout Scheme will take effect:

 

1. Reduction of cash payout rate for qualifying expenditure incurred on or after 1 Aug 2016 from 60% to 40% (the cash payout rate is not determined by the date of submission of the cash payout application); and

 

2. Compulsory e-Filing of cash payout applications. Hardcopy applications will not be accepted from 1 Aug 2016.

 

​Source: IRAS

 

What is PIC?

PIC stands for Productivity & Innovation Credit (PIC). The PIC scheme was introduced in 2010 Singapore budget to encourage companies, especially small and medium enterprises (SMEs) to invest more in productivity and innovation. Businesses can enjoy huge tax savings or cash payout when they invest in any of the 6 productivity improvement activities.

 

These activities include:
1) Training of employees,
2) Acquisition or leasing of PIC automation equipment,
3) Acquisition of intellectual property rights,
4) Investment in design projects approved by the Design Singapore Council,
5) Research and development activities,
6) Registration of patents, trademarks, designs and plant varieties.

 

How does PIC benefit me?

On your Years of Assessment (YA) 2011 to 2015, PIC allows you to claim cash payout or 400% tax deduction.

 

For tax deduction, you can enjoy 400% tax deduction on up to $400,000 of your spending each year in each of the 6 activities. To apply for tax deduction, simply include the claim amount in 'Allowable Business Expenses' of the four-line statement when you file your income tax return for Year of Assessment (YA).

 

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For cash payout, you can apply to convert up to $100,000 of your total spending in all 6 activities into a non-taxable cash payout. The cash payout option is more beneficial for businesses with low or no taxable income. To apply for cash payout, mail the PIC Cash Payout Application Form to the Inland Revenue Authority of Singapore (IRAS) any time before the filing due date of the income tax return.

 

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Does cloud computing qualify for PIC scheme?


Yes, cloud computing falls under the category of Acquisition and Leasing of PIC IT and Automation Equipment. Cost incurred on cloud computing services is one of the qualifying expenditure. There is no need to give a breakdown of the cloud computing payment; the full amount will qualify for PIC.

 

PIC Bonus (New)

PIC Bonus was announced in 2013 Singapore Budget. Businesses that invested in qualifying activities under PIC scheme for Years of Assessment (YAs) 2013 to 2015 will receive PIC Bonus.

PIC Bonus is a dollar-for-dollar matching cash bonus, up to $15,000 for 3 YAs combined. It is an additional payout on top of the existing 400% tax deduction and/or 60% cash payout.


To qualify for PIC Bonus, businesses are required to make a claim for the 400% tax deduction or cash payout., have active business operation in Singapore, and at least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions) excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company.

 

Please note that PIC Bonus is taxable. For more information on PIC Bonus, please click here to read more.

 

Useful information

IRAS website: www.iras.gov.sg
Hotline: 1800 356 8622
Operating hours: Monday – Friday, 8am – 5pm

Source: www.iras.gov.sg

 
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