SIX QUALIFYING ACTIVITIES UNDER the Productivity Innovation Credit PIC Scheme
The six productivity improvement activities covered under PIC are:
- Purchase or leasing of PIC Automation Equipment* (223KB);
- Training of employees;
- Acquisition of Intellectual Property Rights;
- Registration of patents, trademarks, designs and plant varieties;
- Research and development activities; and
- Design projects approved by DesignSingapore Council .
Overview of Productivity and Innovation Credit (PIC Scheme)
1. Who is eligible for the PIC scheme?
All businesses are eligible for PIC, if they have incurred expenditure in any of the six qualifying activities.
Branches and subsidiaries with the parent or holding company being a foreign incorporated company are also eligible for the PIC scheme.
2. Do investment holding companies qualify for PIC?
Investment holding companies do not qualify for PIC as they are not carrying on a trade or business for tax purposes. These companies own investments such as properties and shares for long term investment and derive investment income such as dividend, interest or rental.
Contact us to find out more about Preparing tax computation for investment holding companies.
3. What is the qualifying period for Productivity Innovation Credit?
The PIC scheme is effective for five years from YA 2011 to YA 2015. The new Productivity Innovation Credit Bonus started in YA 2013, claim it now!
For example, if you incurred qualifying expenditure in Nov 2010 and your accounting year ended on 30 Jun 2011, you are eligible to claim PIC in your Income Tax Return for YA 2012.
4. Will qualifying expenditure that is fully or partially funded by the Government or a statutory board qualify for PIC?
The enhanced deduction/allowances under the PIC scheme is computed based on qualifying expenditure net of the grant and subsidy received.
5. If I am a newly set up company, can I enjoy both PIC and the tax exemption scheme for new start-up companies?
Yes, if your company meets the conditions under PIC and “Tax exemption scheme for new start-up companies” respectively.
6. Do service companies qualify for PIC?
A service company is one which renders services to/on behalf of its related companies.
Service companies that derive arm’s length fees will qualify for PIC. These companies will need to prepare their tax computations under the normal tax rules. If a service company wishes to elect for cost plus mark-up basis of assessment, the company will not qualify for PIC. This is because an acceptance of mark-up as the chargeable income of the company is net of all available deductions and allowances (including PIC).
Contact us to find out more about preparing tax computation terms for company servicing only related companies.
7. Does PIC apply to companies that are taxed at the concessionary rate?
Yes. Even though the income is taxed at concessionary rate, PIC will be applicable as long as the company incurs qualifying expenditure during the basis 5 years period for YA 2011 to YA 2015.
*Above is the excerpt from the FAQ of PIC (IRAS). More information can be found on the link http://www.iras.gov.sg/irasHome/page04.aspx?id=13838
Email us to find out more about applying for the PIC over time. Regardless of whether you are a manufacturing, management or service provider enterprise, we can help you!