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Productivity And Innovation Credit (PIC)
…….. Get significant tax deductions or
payouts for your investments in research & development, innovation,
automation and training.
For who?
All Singapore-registered
businesses are eligible for PIC.
For what?
For businesses to invest in a
broad range of activities along the innovation value chain to improve
innovation and productivity from Years of Assessment (YAs) 2011 – 2018.
PIC covers spending on 6
business activities in the following areas:
Ø
Research & development (R&D) - including R&D projects
conducted outside Singapore
Ø
Registration of intellectual property rights – patents, trademarks,
designs and plant varieties
Ø
Acquisition of intellectual property rights (E.g. when a company buys
a patent or copyright for use in its business)
Ø
Acquisition or leasing of prescribed automation equipment
Ø
Training of employees
Ø
Approved design projects
For more details on each of the 6
activities, please refer to the Summary of Deductions/Allowances on
Qualifying Activities table on the Inland Revenue Authority of Singapore's
(IRAS') website.
The basis period refers to
your accounting period ending in the year before the YA, e.g:
Ø
If your accounting period ends on 30 September, the basis period for
YA 2011 will be 1 October 2009 – 30 September 2010.
Cash
Payout Option
Small and growing businesses
with cash constraints have the option to convert their qualifying PIC
expenditure into a cash payout to invest in technology or upgrade their
operations
Ø
This cash conversion option will be from YAs 2011- 2015 and YAs 2016 – 2018.
To be eligible for the cash
payout option, businesses must have:
Ø
incurred the necessary qualifying expenditure during the basis
periods for YAs 2011 - 2015
Ø
at least 3 local employees (Singapore Citizens or Permanent Residents
with Central Provident Fund contributions)
Ø
active business operations in Singapore
From YA2014 onwards, the
condition of 3-local employees must meet the following:
Ø
the
claimant is able to produce supporting documents about the company’s
corporate structure.
Ø
the
company’s corporate structure and centralised
hiring practices are adopted for bona fide commercial reasons.
Ø
employees who have been recharged of employment cost will not contribute to
the requisite headcount.
*Examples
of centralised hiring arrangements include
deployments and secondments to a related company.
Once seconded, the staff costs are fully recharged to the related company.
How much?
Up to 400% tax deductions/ allowances
and/or 60% cash payout.
All Business Claiming PIC
Businesses can deduct 400% of their qualifying
expenditure on each of the 6 qualifying activities from their income,
subject to:
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Year of
Assessment (YA)
|
Expenditure
Cap per Qualifying Activity
|
Tax
Deduction per Qualifying Activity
|
|
2011 and 2012
(Combined)
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S$800,000
|
S$3,200,000
(400% x S$800,000)
|
|
2013 to 2015
(Combined)
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S$1,200,000
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S$4,800,000
(400% x S$1,200,000)
|
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2016 to 2018
(Combined)
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S$1,200,000
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S$4,800,000
(400% x S$1,200,000)
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See:Illustration
examples in IRAS website
Small & Growing Businesses
Converting Their Qualifying Expenditure To A Cash Payout
These
businesses will have the option to convert S$400 to S$100,000 of their
qualifying expenditure for all 6 activities taken together into a cash
payout.
See: FAQs on Cash Payout Option
PIC Tax Deferral Option
The Tax Deferral
option has been put in place to help businesses with their cash flow and
investments in productivity.
The Tax
Deferral option is available for businesses who
choose to defer tax payable for YA 2011 to 2014.
The
amount of tax businesses can defer is capped at S$100,000 and is computed
based on the lower of:
Ø
The tax payable assessed for the current YA; and
Ø
The qualifying PIC expenditure incurred in the current accounting
year.
Things to note
The Tax Deferral option will
be phased out after 2014.
Refer to the PIC IT and
Automation Equipment List for the prescribed list of IT and
automation equipment qualifying for PIC.
Prior approval from DesignSingapore Council is required for
claims on design projects.
Offenders convicted of PIC
fraud will have to pay a penalty of up to 4 times the amount of cash payout
fraudulently obtained, and a fine of up to S$50,000 and/or imprisonment of
up to 5 years.
For more info
Productivity and Innovation Credit
(PIC) by Inland Revenue Authority of Singapore
(IRAS)
How to apply?
You may contact us at Tel: 6220 3306 to find out
more.
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