• All businesses are eligible for the Productivity and Innovation Credit (PIC).

• For businesses to invest in a broad range of activities along the innovation value chain to improve innovation and productivity from Years of Assessments (YAs) 2011 – 2015.
• PIC covers spending on 6 business activities in the following areas:
  
  1. Research & development (R&D) - including R&D projects conducted outside Singapore
  2. Registration of intellectual property rights – patents, trademarks, designs and plant varieties
  3. Acquisition of intellectual property rights – e.g. when a company buys a patent or copyright for use in its business
  4. Acquisition or leasing of prescribed automation equipment
  5. Training of employees
  6. 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.
  
  
• To claim for tax deduction or allowances under PIC, the qualifying expenditure must be incurred during the basis period for YAs 2011 – 2015. The basis period refers to your accounting period ending in the year before the YA, e.g.:
  
  • 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.
  
  • This cash conversion option will be from YAs 2011- 2015.
• To be eligible for the cash payout option, businesses must have:
  
  • incurred the necessary qualifying expenditure during the basis periods for YAs 2011 - 2015
  • at least 3 local employees (Singapore Citizens or Permanent Residents with Central Provident Fund contributions)
  • active business operations in Singapore

• You can use the Business Benefits Calculator on the Ministry of Finance (MOF) website to estimate your benefits under the PIC.

  All Businesses Claiming PIC

  Businesses can deduct 400% of their qualifying expenditure on each of the 6 qualifying activities from their income, subject to: a combined cap of S$800,000 of expenditure for each activity (from YA 2011 – 2012) a combined cap of S$1,200,000 of expenditure for each activity (from YA 2013 – 2015) See: Illustration examples in IRAS website explaining how the Credit is computed

  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. The conversion is done at a rate of 30% up to a S$30,000 payout per year from YA 2011 – 2012; and 60% up to S$60,000 payout per year from YA 2013 – 2015. For YAs 2011 and 2012, businesses can convert up to a combined total of S$200,000 qualifying expenditure for all 6 activities into a cash payout. This works out to a cash payout of up to S$60,000 (30% x S$200,000). 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.
• Under the Tax Deferral option, businesses can choose to defer a dollar of current YA’s tax for every dollar of qualifying PIC expenditure incurred in the current accounting year, up to a cap of S$100,000.
• This tax deferral option will be available for 4 years (from YAs 2011 – 2014) based on qualifying PIC expenditure incurred in the accounting years 2011 to 2014.
• The amount of tax businesses can defer is capped at S$100,000 and is computed based on the lower of:
  
  • the tax payable assessed for the current YA; and
  • the qualifying PIC expenditure incurred in the current accounting year. 

Productivity Innovation Credit (PIC)

• Businesses applying for the cash payout must complete and submit the PIC Cash Payout Application Form directly to IRAS.
• You can submit your application anytime after the end of your business’ accounting year in which the qualifying expenditure is incurred but no later than the filing deadline of your business’ income tax return.
• For YA 2013 to 2015, you may opt for cash payout on a quarterly basis anytime after the end of each financial quarter but no later than the filing deadline of your business’ income tax return.
• The application procedure and revised cash payout application form will be available on IRAS’ website by 15 April 2012.

Tax Deferral Option

• Businesses that would like to opt for Tax Deferral must complete and submit the PIC Tax Deferral Form directly to IRAS.
• You can submit the form anytime after your business has incurred the qualifying expenditure but no later than the end of the current accounting year.
• IRAS will process your application within 30 days after receiving the completed form. You will be informed on the amount of tax that can be deferred.
• If your business has already paid the assessed tax for the YA, a tax refund will be made to you within 30 days upon receipt of the form.

• Prior approval from DesignSingapore Council is required for claims on design projects.
• You must submit the Disposal of Qualifying Assets Form to IRAS within:
  
  • 30 days from the date the prescribed automation equipment is disposed of/leased out, unless the disposal/lease is within the auto-waiver from the recovery provisions, or
  • 30 days from the date the intellectual property rights is disposed of/rights in any software acquired is licensed out.  

Productivity and Innovation Credit
Frequently Asked Questions on PIC 
Frequently Asked Questions on Cash Payout  
Frequently Asked Questions on Tax Deferral
Inland Revenue Authority of Singapore (IRAS)

• For Sole-Proprietors and Partnerships
  Tel: (65) 6351 3534
  Email: picredit@iras.gov.sg
• For Companies
  Local Toll-Free: 1800 356 8622
  International: (65) 6356 8622
  Email: picredit@iras.gov.sg