PIC Grant Singapore
Productivity & Innovation Credit(PIC): A Solution for Business in Singapore
It was in 2010 when the “Productivity & Innovation Credit” or PIC was launched in Singapore Budget. It aims at providing relevant tax deductions for businesses. It has 6 components and one of these is the “Investment in Design.” It intends to motivate persistent and uninterrupted innovation in businesses in Singapore.
Who is Eligible for PIC?
All businesses in Singapore are qualified to apply for the Productivity & Innovation Credit or PIC
What is the Coverage of PIC?
The program is available for 5 years and eligible costs should be made within the basis periods for Year of Assessment or YA 2011 to 2015. Companies can subtract a 400% tax deductions for the initial S$400,000 which is spent on eligible Product & Industrial Design Projects or “Design Projects” from their profit. This should be subjected to the following:
• YA 2011 & 2012 mixed cap amounting to S$800,000 of expenditure/disbursements
• YA 2013-2015 mixed cap of S$1,200,000 of expenditure/disbursements
For companies or businesses to spend or invest in multiple activities with the innovation value chain to enhance innovation and productivity between the period or Year of Assessment 2011-2015.
Productivity & Innovation Credit or PIC includes those with six business endeavors in the areas of
• Research & Development or R&D which includes research and development made outside of Singapore;
• Registration of Intellectual Property Rights includes trademarks, patents, plant variations, and designs;
• Lease or Acquisition of approved automation equipment;
• Acquisition of Intellectual Property Rights like when the business purchases a patent or copyright for their business or company;
• Accepted design projects;
• Training of workers
Revised Cash Out Option
This option is available to support small and growing companies/businesses with cash limitations or difficulties to improve their productivity. These companies or business may exercise their option to convert their expenditure into non-taxable cash payout. They will be allowed to convert for a minimum of $400 up to $100,000 of their overall expenditure in all their 6 approved or qualifying business activities into cash payout.
This cash payout is offered between YA 2011 and 2015 at 30% conversion rate within YA 2011-2012; and 60% conversion rate for YA 2013-2015. The conversion rate of 60% was declared in 2012 Budget to support companies and businesses in improving their productivity.
YA 2011-2012, companies or businesses can choose to convert for up to a joint cap amounting to $200,000 approved expenditure for the 6 qualifying business activities into cash payout. Hence, maximum cash payout is $60,000 (from $200,000 x 30%) for YA 2011 and YA 2012.
For new incorporated or registered companies or businesses established in YA 2012, expenditure cap for 6 qualifying business activities is $100,000 with a maximum cash payout of $30,000 for YA 20112.
For YAs 2013-2015, companies or businesses can avail of cash payout for up to $60,000 (from $100,000 x 60%) for every year with greater conversion rate 60%. Companies or businesses qualified to choose this cash payout are under partnerships, sole-proprietorships, and companies with registered business trusts that
• Have the qualifying expenditure and are eligible for PIC within the qualifying YA periods;
• Have at least three local workers who are Singapore citizens or with Permanent Residents with CPF contributions; this excludes partners with contract for service, sole-proprietors, shareholders who are the directors of the companies or business entities. For a business to be considered to meet the required 3 local workers qualification when they contribute CPF on the payrolls of a minimum of three local workers in the previous month of its basis period of qualifying YA; and
• Have active business undertakings in Singapore.
Learn the details and the application procedure for cash payouts from the official website of Inland Revenue Authority or IRAS: www.iras.gov.sg.
Qualified companies and businesses can claim their tax deduction or their allowance under PIC program when their qualifying expenditure is incurred within YAs 2011 to 2015. It is the accounting period which ends in the year before YA. For example, if your accounting period ends in March 30, basis period for YA 2011 is April 1, 2009 to March 30, 2010.
Requirements & Guidelines for Application
Productivity Innovation Credit or PIC
• Companies/businesses who intend to apply for cash payout option should complete and submit PIC cash Payout Application to IRAS.
• Submission of application is anytime after the end of your company/business’ accounting year where the qualifying expenditure occurred but not later than the filing deadline of business’ income tax return.
• With YA 2013-2015, you may choose cash payout quarterly, anytime after the end of every financial quarter but not later than the filing deadline of the business’ income tax return.
Tax Deferral Option
• This option is offered for four years, between YA 2011 and 2014 on the basis of qualifying PIC Deferral Form.
• Companies and businesses who prefer Tax Deferral Option should complete and submit PIC Tax Deferral Form to IRAS.
• Submission of the Form should be anytime after the business has occurred qualifying expenditure but not later than the end of the present accounting year.
• Application will be processed by IRAS within thirty days after submission or receipt of the completed Form. Companies will be notified regarding the deferred amount for the tax.
• If the business or company has paid the assessed tax for the YA, tax refund will be processed and made to these companies within thirty days upon receiving the Form.
Business Benefits Calculator is available at the official website of the Ministry of Finance or MOF so you can compute and estimate your benefits from PIC.
A. All Business Applying for PIC
– Business entity can subtract 400% of their qualifying expenditure on every 6 qualifying business activities from their profit and are subjected to:
-Combined cap amounting to S$800,000 of the expenditure for every business activity within the period YA 2011-2012;
-Combined cap amounting to S$1,200,000 of the expenditure for every business activity within the period YA 2013-2015.
B. Small and Growing Businesses/Companies Converting Qualifying Expenditure to Cash Payout Option
-They shall choose to convert S$400 up to S$100,000 of their qualifying expenditure for six business activities incurred into cash payout;
-The conversion is made at 30% rate for up to S$30,000 payout for each year between YA 2011 and 2012; 60% for up to S$60,000 payout for each year within YA 2013-2015;
-For terms YA 2011 and 2012, companies is allowed to convert for up to combined sum of S$200,000 which is up to S$60,000 (or 30% of S$200,000) of qualifying expenditure for the six business activities into cash payout.
If you wish to know more about PIC Grant, you can contact us and book an appointment us today.
“information in the website does not claim to be correct in all situations and professional help should be sought for the readers’ specific situation”