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How can PIC help SMEs

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How can PIC help SMEs

2021-01-27T17:38:41+08:00January 6, 2015|Comments Off on How can PIC help SMEs

Update: Businesses can no longer claim Productivity and Innovation Credit (PIC) benefits on qualifying expenditure after YA2018 because the scheme has been discontinued by IRAS!

Productivity and Innovation Credit (PIC)is an initiative by the Inland Revenue Authority of Singapore (IRAS) in 2010.

SMEs face a lot of problems during their initial phase of the start-up or while running the business. One such case is when raising productivity. There are plenty of government schemes that provide targeted assistance to these small and medium enterprises. Productivity and Innovation Credit is one of those.

What is Productivity and Innovation Credit (PIC)?

Productivity and Innovation Credit is one of the government schemes that help SMEs to boost productivity. The Productivity and Innovation Credit is a funding option available for businesses who are needing the money for one of the 6 main PIC goals:

  • Purchase/leasing of PIC equipment
  • Purchasing Intellectual Property Rights,
  • Employee Training
  • Design projects (must be approved by the Design Singapore Council)
  • Research and development activities
  • Registering patents, trademarks, plant varieties, or designs.

Benefits of Productivity and Innovation Credit

Productivity and Innovation Credit gives SMEs an opportunity of getting a dollar-for-dollar bonus. As announced in Budget 2014, from Years of Assessment 2015 to 2018, businesses that qualify for PIC can enjoy 400% tax deductions or allowances on up to$600,000 of their expenditure per year. It must be noted, however, that the combined expenditure cap of $1,400,000 is applicable for the Year of Assessment for 2015. The additional expenditure cap of $200,000 is not available for 2014.

As a SMEs owner, you can either get tax deductions/ allowances from the government or a cash payout for any of the qualifying expenditures. This can include factors like purchasing or leasing office equipment or other assets or imparting training skills such as soft skills or management skills to your company’s staff.

  1. Tax deductions/ allowances

    If you opt for tax deductions/ allowances, you can enjoy 400% tax deductions/ allowances on up to $400,000 of spending per year in each of the six qualifying activities as mentioned above.

  2. PIC+ Scheme

    Qualifying businesses are entitled to 400% tax deductions/ allowances on up to $600,000 of qualifying spending every year (YAs 2015 to 2018). The qualifying expenditure must fall under each of the six qualifying activities.

  3. Cash payout

    You also have an 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. You are entitled to 60% cash payout for qualifying expenditure incurred from YA 2013 to 31 July 2016, any qualifying expenditure incurred on or after 1 August 2016 to YA 2018, the cash payout conversion rate is reduced to 40%.

    The cash payout option is to support SMEs which may be cash-constrained. You must also keep in mind that to qualify for the cash payout option, you must fulfill certain requirements such as employing at least three Singapore citizens and/or PRs and paying for CPF contributions.

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Claiming Productivity and Innovation Credit (PIC)

If you are interested in reaping all the benefits this scheme has to offer, then you should have a very clear idea in mind about what you will do. At the end of your accounting year, make sure that you get all the necessary forms and to complete them, and submit them before your company’s income tax return. You can also opt for a cash payout within this deadline, so do make sure to consider everything.

Before even gathering your paperwork, do make sure that everything is in order. Singapore may create the perfect environment for entrepreneurs, but it does not tolerate fake claims, especially when it comes to the PIC. Do be 100% certain that everything is in order, to maximize your chances at success and be ready to start feeling for yourself how great doing business in Singapore can be.

Easy, hassle-free, and very advantageous for you as a company owner, the PIC may just be the thing people doing business in other countries out there only dream of. Things such as this scheme make Singapore so well appreciated by the entire business world and once you will start reaping the benefits as well, you will understand why this country is so much loved by businessmen.

How to Claim the Productivity and Innovation Credit (PIC) benefits?

Everything business-related in Singapore has been made to be as “friendly” as popular for the entrepreneurs and that includes as little bureaucracy as possible. All you will have to do is submit a PIC Cash Payout Application form and a Hire-Purchase Template to IRAS. Do remember that this paperwork should prove your activity in the Productivity and Innovation fields for the years 2013 to 2018.

Click on the links below to download the:

How can PIC help SMEs FAQs

My company is a branch, is it eligible for Productivity and Innovation Credit (PIC)?2021-02-16T16:51:07+08:00

Yes, all businesses (regardless of a branch, a subsidiary, sole proprietorships, or partnerships) are eligible for PIC.

Do branches and subsidiaries with a foreign parent company entitled to (Productivity and Innovation Credit) PIC?2020-11-26T11:30:17+08:00

Yes, all types of businesses in Singapore are eligible to claim the PIC benefits (including the branches and subsidiaries of companies that are foreign).  

Do branches and subsidiaries with a foreign parent company entitled to (Productivity and Innovation Credit) PIC?2021-02-16T16:50:26+08:00

Yes, all types of businesses in Singapore are eligible to claim the PIC benefits (including the branches and subsidiaries of companies that are foreign).

What are the business activities that qualified for Productivity and Innovation Credit (PIC)?2021-02-16T16:50:04+08:00

6 business activities that are qualified for PIC are:

  • Research and Development (R&D) projects
  • Intellectual Properties (IP) and Rights including designs, trademarks, patents, etc.
  • Purchase of (Intellectual Property) IP for business usage
  • Purchase or leasing of equipment
  • Training of employees
  • Design projects

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