PIC Claim Singapore – Get Cashback by Going Digital
Since 2010, the Singapore government has introduced Singapore’s Productivity and Innovation Credit (PIC) Scheme that encourages businesses to get significant tax deductions or payouts for investments in research and development (R&D), innovation, automation, and training. The math is that business entities registered in Singapore can enjoy a 400% tax deductions/allowances and/or 60% CASH PAYOUTS for investment in innovation and productivity improvements in any of the six qualifying activities.
The tax benefits under PIC are available from 2011 to 2018. Additionally, from 2013 to 2015, businesses can also benefit from a PIC Bonus, which is a dollar-for-dollar matching bonus given on top of the existing tax deductions/ allowances and/or the cash payout.
PIC Singapore Eligibility
Generally, all Singapore-registered business entities are eligible for the PIC scheme and the list includes sole proprietorships, partnerships, companies, registered branches and subsidiaries of a foreign parent or holding company. Though, for the cash payout option, the entity must have at least 3 regular employees with CPF contributions. Such employees do not include sole proprietors, partners under a contract of service, and shareholders who are also directors of the company.
6 Qualifying Activities for Productivity and Innovation Grant Singapore
As the country embarks on a major productivity drive, the scheme is being implemented for businesses to invest in a broad range of activities along the innovation value chain to improve innovation and productivity from year of assessment (YA) 2011 to YA 2018. The basis period in the scheme refers to the accounting period ending in the year before the YA. For example if a company’s accounting period ends on October 31, the basis period for YA 2014 will be November 1, 2012 – October 31, 2013. Productivity and Innovation Credit Scheme Singapore covers spending on 6 business activities in the following areas:
- Acquisition and leasing of PIC Information Technology (IT) and automation equipment
- Training of employees.
- Acquisition and in-licensing of Intellectual Property (IP) rights
- Registration of patents, trademarks, designs, and plant varieties
- Research and development activities
- Design projects approved by Design Singapore Council
PIC IT and Automation Equipment List
In line with the newly announced Smart Nation and Digital Government Office (SNDGO) under the Singapore’s Prime Minister Office, businesses should leverage on the increasing opportunities offered by the accelerating pace of change in digital technology, and the increasing breadth and complexity of IT and smart systems.
It’s time to take charge of your business growth, go digital and be informed about the enhanced deduction/allowances allocated for the list of IT and automation equipment qualified under the Productivity and Innovation Credit (“PIC”) scheme, which be found in the Income Tax (PIC Automation Equipment) Rules 2012 and the Income Tax (PIC Automation Equipment) (Amendment) Rules 2015.
Below is the list of some common prescribed PIC IT and automation equipment that are utilized by competitive businesses of all sizes in this digital world of innovation:
| S/N |
PIC IT and Automation Equipment |
Capital Allowances – 100% write-off in one year [S19A(2)] |
Remarks |
| 1 | Image or graphics processing equipment, including display, facsimile, optical character reader, laser printer, plotter, image setter, digital printing, direct imaging equipment and scanner. | ✓ | |
| 2 | Data processing and information technology equipment, including mainframe, minicomputer, microcomputer, desktop, laptop, mobile phone, personal digital assistant and other information technology devices and peripherals. | ✓ | |
| 3 | Data communications and networking equipment, including modem, multiplexor, network processor, servers, interface converter,routers, switches, networks, cabling infrastructure, IP telephony systems, broadband connectivity equipment and security and authentication infrastructure. | ✓ | |
| 4 | Information technology software including office system software and software used in connection with provision of any office automation service, enterprise resource planning, customer relationship management such as reservations, registration, queue management, ordering, billings and collections, inventory management, record management, knowledge management, human resource and payroll management, financial information and business management such as accounting and assets management, and personnel business travel request, information and management | ✓ | |
| 5 | Computer-aided design system software and computer-aided manufacturing system software. | ✓ |
As per shown in the table above, these common IT and automation equipment are prominent in modern businesses’ day-to-day productivity. If your company utilizes any of the IT and automation equipment above you can be gain various benefits such as below, though there are certain terms and conditions to be followed.
PIC Benefits
| Tax Deductions/ Allowances | 400% tax deductions/ allowances on up to $400,000 of spending per year in each of the six qualifying activities.
PIC+ Scheme From YAs 2015 to 2018, qualifying businesses can enjoy 400% tax deductions/allowances on up to $600,000 of qualifying expenditure per year in each of the six qualifying activities. For more details, please refer to How PIC Benefits You. |
| Cash Payout | Option to convert up to $100,000 of total spending in all six activities for each YA into a non-taxable cash payout, in lieu of the tax deduction/allowance.
For qualifying expenditure incurred from YA 2013 to 31 July 2016, the cash payout is 60%. For qualifying expenditure incurred on or after 1 August 2016 to YA 2018, the cash payout conversion rate will be at 40%. For more details, please refer to How PIC Benefits You. |
Qualifying Conditions
| Tax Deductions/ Allowances | Carries on active business operations in Singapore.
Incurred qualifying expenditure and are entitled to PIC during the basis period of qualifying YA. |
| Cash Payout | Carries on active business operations in Singapore.
Incurred qualifying expenditure and are entitled to PIC during the basis period of qualifying YA. Minimum qualifying expenditure for each cash payout option application is $400. For PIC IT and automation equipment claims relating to YA 2016 onwards, equipment to be in use by the business at the point of electing for cash payout. |
Claiming PIC Benefits
| Tax Deductions/ Allowances | Other than design projects, no prior approval from IRAS is required. Claim enhanced deductions/ allowances in your Income Tax Return for the relevant YA by the filing due date. |
| Cash Payout | e-File PIC Cash Payout Application Form anytime after end of relevant financial quarter (for YAs 2013 to 2018) but before the filing due date of Income Tax Return for the relevant YA. |
Take Advantage of the PIC Grant Today
Competitive businesses like Whirlpool, HP, Asics, Shaw Floors, and SalesForce, have chosen G Suite to streamline their organisations’ day-to-day productivity. G Suite simplifies the way team work and collaborate. Regardless of your business’s size, G Suite offers professional business email, video conferencing, cloud storage, and file sharing. It’s all the tools team needs to collaborate and get more done, together in one place. In supporting the Singapore Prime Minister’s Office Smart Nation and Digital Government Group, PointStar has launched training packages, to help Singapore businesses including startups, SMEs & SMBs to train the employees on getting the most out of the business solutions such as TransformMyBiz for G Suite and UpMySkill for NetSuite. The Smart Nation and Digital Government Group (SNDGG) is said to be formed this coming May 1st 2017 and it will be an executive agency that oversees various ministries and government agencies, and supports the Prime Minister in corporate and administrative matters.
Need assistance for a PIC claim?
Singapore’s Productivity and Innovation Credit (PIC) Scheme can be availed if your company qualify for any/all 6 activity mentioned above. If you would like PointStar to assist you with any of the IT automation equipment above, feel free to talk to our consultants and experts. We advocate the digital transformation of Singapore businesses and organizations as we believe it the way forward. Our team is certified as a Practising Management Consultant (PMC) and works with numerous Singapore Government agencies such as SPRING, IE Singapore and IMDA amongst others to help ‘digitally transform’ Singapore-based business to be more ready for the future through the cloud platform.
