The Productivity and Innovation Credit ("PIC") was introduced in the Singapore Budget 2010.
The PIC scheme has been enhanced in Singapore Budget 2011 to provide tax benefits (ie. enhanced deduction/allowances up to 400%) for investments by businesses in 6 PIC-qualifying activities. The tax benefits under PIC will be effective from Years of Assessment (YA) 2011 to YA 2015.
The 6 PIC-qualifying activities are:
- Acquisition or leasing of prescribed automation equipment;
- Training of employees;
- Acquisition of Intellectual Property Rights;
- Registration of patents, trademarks, designs and plant varieties;
- Research and development activities; and
- Investment in approved design projects.
Tax Benefits under the PIC Scheme
| Qualifying activities | Brief description of qualifying expenditures under the PIC | Total deductions / allowances under the PIC (as a % of qualifying expenditure) | Examples of qualifying expenditures |
|---|---|---|---|
| Acquisition or Leasing of Prescribed Automation Equipment | Costs incurred to acquire/lease prescribed automation equipment | 400% allowance / deduction for qualifying expenditure subject to the expenditure cap* | Cost / Lease expenses of IT equipment such as fax machine, laser printer, computer, lap-tops and software** |
| Training Expenditure |
Costs incurred on: In-house training (i.e. Singapore Workforce Development Agency ("WDA") certified, Institute of Technical Education ("ITE") certified); or All external training. |
400% tax deduction for qualifying expenditure subject to the expenditure cap* | External course fees for staff; Costs incurred on internal Workforce Skills Qualification ("WSQ") courses for employees' skills upgrading |
| Acquisition of Intellectual Property Rights ("IPRs") | Costs incurred to acquire IPRs for use in a trade or business (exclude EDB approved IPRs and IPRs relating to media and digital entertainment contents) | 400% allowance for qualifying expenditure subject to the expenditure cap* |
Payment to buy a patented technology for use in manufacturing process; Price paid for trademark |
| Registration of Intellectual Property Rights ("IPRs") | Costs incurred to register patents, trademarks, designs and plant variety | 400% tax deduction for qualifying expenditure subject to the expenditure cap* | Fees paid to Intellectual Property Office of Singapore ("IPOS") to register trademark |
| Research & Development ("R&D") | Costs incurred on staff costs and consumables for qualifying R&D activities carried out in Singapore or overseas if the R&D done overseas is related to the taxpayer's Singapore trade or business | 400% tax deduction for qualifying expenditure subject to the expenditure cap* | Salaries for R&D personnel and fees to R&D institute for creating a novel product |
| Design Expenditure | Costs incurred to create new products and industrial designs where the activities are primarily done in Singapore | 400% tax deduction for qualifying expenditure subject to the expenditure cap* | Fees to engage in-house eligible designers or outsourced to eligible design service providers to carry out approved design activities |
* Total expenditure cap for YA 2011 and YA 2012 - $800,000 for each of the six qualifying activities.
Total expenditure cap for YA 2013 to YA 2015 - $1,200,000 for each of the six qualifying activities.
** For lease payment of software, the lessee must be the end user having only the right to use the software and not the right to reverse engineer, decompile, or disassemble the software, or exploit the copyright to the software.
Option for PIC Cash Payout
You may also elect for cash payout instead of claiming for enhanced PIC deduction / allowances by completing and submitting the PIC Cash Payout Application Form (92KB) and relevant annexes to IRAS.
The cash payout will be made by IRAS within three months from the date of receipt of the original PIC Cash Payout Application Form and applicable annexes. Submission must be complete (in full) at the time of application.
Eligibility for PIC Cash Payout Option
Businesses eligible to opt for the PIC cash payout are sole-proprietorships, partnerships, companies (including registered business trusts) that have:
- incurred qualifying expenditure and are entitled to PIC during the basis period for the qualifying YA;
- active business operations in Singapore; and
- at least three local employees (Singapore citizens or PRs with CPF contributions excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company). A business is considered to have met this three-local-employees eligibility if it contributes CPF on the payrolls of at least three local employees in the last month of its basis period for the qualifying YA.
Help and Advice
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