The Singapore Government originally devised the Productivity and Innovation Credit (PIC) Scheme, in order to extend financial support to Singapore businesses, by way of Cash Subsidies, Grants, Aids and Tax Deductions etc.
The original PIC Scheme was announced in 2010 with budget allocation and to be valid till 2014. In view of the expiry of PIC Scheme, in the budget of 2014 another extension of PIC Scheme was announced as PIC Plus Scheme. Virtually, the PIC Plus Scheme is to give more life to the PIC Scheme and at the same time expand the scope of benefits available to Singapore businesses.
While there was slight change in respect of qualification criteria for availing the PIC Grant benefits for Singapore businesses, Sole Proprietorships, Partnerships and Companies, the maximum limit of PIC Grant Benefits under Tax deduction has been raised to $600,000 for the financial years 2015 to 2018 from the earlier sum of $400,000; the Qualifying Expenditure combined limit has been enhanced for a total of $1,400,000 in 2013 to 2015 and again to $1,800,000 during 2016 to 2018.
PIC Grant Singapore benefits have been restricted for qualifying businesses, in respect of those whose turnover is within $100 million; total employee strength does not exceed 200; and only for those who run active businesses in Singapore. Group of companies will be assessed on the basis of each Enterprise in the Group.LEARN MORE
One of the PIC Grant Benefits, the Cash Payout is the direct Cash Incentive available for small and developing enterprises suffering from cash-crunch.
Introduced in the PIC Scheme of 2010 budget, the Cash Payout was that qualifying businesses of Singapore can claim 60% of the Qualifying Expenditure classified under 6 categories.
For all the categories put together, the maximum limit was $1, 00,000 that is they can claim a Cash Payout of 30% per year totaling $60,000 for 2011 and 2012 where the maximum limit can be combined.
In the PIC plus Scheme this has been modified as 60% per year on a ceiling of $100,000 (not combinable) from the year 2013 to 2018.
For availing Cash Payout, the Qualifying Expenditure as stipulated in the PIC Grant specifications spent on introduction of innovation, sophistication in equipments, upgraded technology and training of staff etc. is the main consideration.
The Free cash which is non-taxable as Cash Payout is a real boon and should be claimed in the appropriate format along with documentary proof, for spending the Qualifying Expenditure under each category of the 6 categories separately.LEARN MORE
The government of Singapore instigated several grant schemes and vouchers in the past few years in order to provide incentives to small businesses and startups to invest in projects that will increase their productivity and efficiency in service delivery for the overall benefit of the nation.
From the year 2010, certain amounts of money have been set aside with each budgetary allocation towards this end.
The productivity and innovation credit scheme or PIC Grant was started in 2010 to be one such scheme. Apart from PIC Grant Scheme in Singapore, other grants that are available to SMEs and qualifying enterprises in Singapore include the Innovation and Capability Voucher (ICV) and the Capability Development Grant (CDG).
A business that qualifies for the PIC Grant in Singapore scheme stands to reap the benefit of either tax deductions and allowances of up to 400% of their qualifying expenditure or a cash payout for 60%, provided they have incurred relevant expenditure each year of assessment.
Relevant expenditures which qualify for PIC Grant Scheme in Singapore have been broadly classified in six categories. In the initial scheme started in 2010, the program was meant to run for five years up to 2015, but was extended to 2018 in the budget allocation of 2014.
These categories are:
• Staff training exercises
• Procurement and/or lease of mechanization or automation equipment
• Procurement and/or lease of equipment for IT related applications
• Acquirement, registering and in-licensing a company’s intellectual property
• Activities geared towards research and development
• Approved design-related programs – DesignSingapore Council being the oversight body.
The PIC Grant Schemes in Singapore are managed by affiliate agencies of the government, such as the DesignSingapore council, which was constituted to inspire business enterprises and companies in Singapore to never stop in their endeavors towards the use of innovation in solving productivity difficulties.
Qualified enterprises also stand to gain from cash PIC grant bonus, dollar-for-dollar, on relevant expenses invested between the years 2013-2015, without requiring a separate application. The maximum bonus amount is $15,000 for the three years. However, you cannot claim PIC Grant for periods before the stipulated years, or for years your business did not exist even if the scheme was running.
Each qualifying expense has been listed in the IRAS website. The IRAS is the government agency that oversees the PIC Grant scheme, and they have the authority to rate certain expenditure as qualifying on a case-by-case basis. If you think you have qualifying expenditure that isn’t listed with the IRAS, you may apply for a determination by the body.
The maximum amounts that a business can claim in PIC tax deduction is $400,000 until the year 2015, then $600,000 from 2016-2018. The cash payout is capped at 60% of $100,000 which is $60,000.
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