Productivity And Innovation Credit (PIC)

Get significant tax deductions or payouts for your investments in research & development, innovation, automation and training.

As announced during the Budget Speech on 25 February 2013, enhancement are added to PIC. More details on IRAS website.
  • All Singapore-registered businesses are eligible for PIC.
  • For businesses to invest in a broad range of activities along the innovation value chain to improve innovation and productivity from Years of Assessment (YAs) 2011 – 2018.
  • PIC covers spending on 6 business activities in the following areas:
    • Research & development (R&D) - including R&D projects conducted outside Singapore
    • Registration of intellectual property rights – patents, trademarks, designs and plant varieties
    • Acquisition of intellectual property rights (E.g. when a company buys a patent or copyright for use in its business)
    • Acquisition or leasing of prescribed automation equipment
    • Training of employees
    • 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.

  • 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 businesseswith 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 and    YAs 2016 – 2018.
  • 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
  • From YA2014 onwards, the condition of 3-local employees must meet the following:
    • the claimant is able to produce supporting documents about the company’s corporate structure.
    • the company’s corporate structure and centralised hiring practices are adopted for bona fide commercial reasons.
    • employees who have been recharged of employment cost will not contribute to the requisite headcount.

    *Examples of centralised hiring arrangements include deployments and secondments to a related company. Once seconded, the staff costs are fully recharged to the related company.

All Business Claiming PIC

Businesses can deduct 400% of their qualifying expenditure on each of the 6 qualifying activities from their income, subject to:

Year of Assessment (YA) Expenditure Cap per Qualifying Activity Tax Deduction per Qualifying Activity
2011 and 2012
(Combined)
S$800,000 S$3,200,000
(400% x S$800,000)
2013 to 2015
(Combined)
S$1,200,000 S$4,800,000
(400% x S$1,200,000)
2016 to 2018
(Combined)
S$1,200,000 S$4,800,000
(400% x S$1,200,000)

See:Illustration examples in IRAS website

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.

Year of Assessment (YA) Expenditure Cap for ALL Qualifying Activities Cash Payout
2011 – 2012
(Combined)
S$200,000 S$60,000
(30% x S$200,000)
2013 – 2015
(Combined)
S$100,000 per YA S$60,000 per YA
(60% x S$100,000)
2016 – 2018
(Cap cannot be combined)
S$100,000 per YA S$60,000 per YA
(60% x S$100,000)

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.
  • The Tax Deferral option is available for businesses who choose to defer tax payable for YA 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’s accounting year in which the qualifying expenditure is incurred but no later than the filing deadline of your business’s income tax return.
  • For YA 2013 to 2018, 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.
  • If you are claiming cash payout on PIC IT and Automation Equipment acquired under a hire-purchase agreement for YAs 2013 to 2015, you must also complete the Hire-Purchase Template.
  • IRAS will generally make the cash payout within 3 months of receipt of the properly completed application form, relevant annexes and hire-purchase template.

Tax Deferral Option

  • Businesses that would like to opt for Tax Deferral must complete and submit the PIC Tax Deferral Form directly to IRAS.
  • The Form should be submitted before the end of the financial year.
  • Businesses that invest in PIC activities in FY 2014 can immediately defer their YA2014 tax payable.
  • 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.
  • The tax refund will be credited into your GIRO account as per IRAS’ records.
  • The Tax Deferral option will be phased out after 2014.
  • Refer to the PIC IT and Automation Equipment List for the prescribed list of IT and automation equipment qualifying for PIC.
  • Prior approval from DesignSingapore Council is required for claims on design projects.
  • Offenders convicted of PIC fraud will have to pay a penalty of up to 4 times the amount of cash payout fraudulently obtained, and a fine of up to S$50,000 and/or imprisonment of up to 5 years.

Productivity and Innovation Credit
PIC e-Tax Guide (PDF)
FAQs on Cash Payout (PDF)
FAQs on Tax Deferral (PDF)

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
Email: picredit@iras.gov.sg

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