Productivity & Innovation Credit

P.I.C Grants

What is the Productivity & Innovation Credit (PIC) Grant?

The IRAS PIC Bonus encourages small to medium enterprise to take advantage of the PIC scheme to invest in innovation and productivity.

Businesses that spend a minimum of $5,000 in PIC activities in one year will receive a dollar-for-dollar matching cash bonus. The cash bonus will be up to $15,000 over three Years of Assessment (YA 2013 to YA 2015). It will be paid on top of the existing PIC Grant benefits, and is expected to cost over $450 million over three years.

The PIC scheme supports investments in Innovation and Productivity. Businesses investing in productivity improvements can now enjoy huge tax savings under the new PIC Grant Scheme.

The PIC Bonus Grant provides up to 400% tax deduction or 60% cash payout to businesses investing in innovative, process automation equipment and facilities. These include software and hardware investments, as well as training and coaching for employees.

There are two options for businesses in Singapore:

 

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For YA 2011 to YA 2015, you can enjoy 400% tax deduction on up to $400,000

How it works

Business can enjoy 400% tax deductions/allowance on up to $400,000 of their expenditure per year in each of the six qualifying activities, Instead of the 100% deductions/allowances under the existing tax rules.

The annual expenditure cap of $400,000 may be combined as follows:

Year of Assessment (YA)Expenditure Cap per Qualifying Activity*Tax Deduction per Qualifying Activity
2011 and 2012
(Combined)
$800,000$3,200,000
(400% x $800,000)
2013 to 2015
(Combined)
$1,200,000$4,800,000
(400% x $1,200,000)
2016 to 2016
(Combined)
$1,200,000$4,800,000
(400% x $1,200,000)

PIC+Scheme

As announced in Budget 2014, from YAs 2015 to 2018, qualifying businesses can enjoy 400% tax deductions/allowances on up to $600,000 (Instead of $400,00 as mentioned above) of their expenditure per year in each of the six qualifying activity under the PIC+Scheme.

The Annual expenditure cap of $600,000 may be combined as follows:

Year of Assessment (YA)Expenditure Cap per Qualifying Activity*Tax Deduction per Qualifying Activity
2013 to 2015
(Combined)
$1,400,000#$5,600,000
(400% x $1,400,000)
2016 to 2016
(Combined)
$1,800,000$7,200,000
(400% x $1,800,000)

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Eligible businesses can apply to convert up to $100,000 of their total expenditure for each YA in all six qualifying activities into a non-taxable cash payout. The cash payout rate is 60% of qualifying expenditure incurred.

The cash payout option is to support small and growing businesses, which may be cash-constrained, and encourage them to innovate and improve productivity.

The maximum cash payout is calculated as follows:

Year of Assessment (YA)Expenditure Cap for All Qualifying ActivitiesCash Payout RateMaximum Cash Payout

2011 and 2012
(Combined)

$200,000*

30%

$60,000
(30% x $200,000)

2013 to 2015
(Cap cannot be combined)

$100,000 per YA

60%

$60,000 per YA
(60% x $100,000)

2016 to 2018
(Cap cannot be combined)

$100,000 per YA

40%

$40,000 per YA
(40% x $100,000)

* Only if you are carrying on a trade or business for the relevant YAs.  Otherwise, the combined cap is reduced accordingly.

Conditions for cash payout

Businesses eligible to apply for the 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 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. A business is considered to have met the 3-local-employees condition if it contributes CPF on the payroll of at least 3 local employees in the relevant month(s).
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IRAS PIC Website :
https://www.iras.gov.sg/irashome/PICredit.aspx