Great news for all business owners! In the Singapore Budget 2014 speech, the PIC scheme which was due to expire in Year of Assessment (YA) 2015, has been extended for another three years until YA 2018!

Why is this great news?

This means that businesses can increase their productivity and innovation which can help increase profitability without having to stress about taxes and finding means and ways to cough out additional equipment.

An additional PIC+ scheme for SMEs will be introduced to help businesses “that are making more substantial investments to transform their businesses.” (Singapore Budget 2014) The expenditure cap will be raised from $400,000 to $600,000 for each qualifying activity from YA2015. This also means that SMEs can now claim tax deductions for up to $1.8 million in expenditure.

However, for the cash payout option, it is important to note that the cap cannot be combined from YA2013 to 2015 and YA 2016 to 2018. The expenditure cap for all qualifying activities remain at $100,000 per YA and the cash payout rate is 60% – maximum cash payout of $60,000 ($100,000 x 60%).

Visit IRAS web link here to understand the PIC cash payout option better.

For an overview of the PIC scheme, you can visit the IRAS link here.

Companies, Partnerships and Sole Proprietors registered in Singapore are eligible for the Productivity and Innovation Credit (PIC), but must to abide by the guidelines of the six qualifying activities by PIC.

For businesses that engage in private R&D, the government will extend the 50% additional tax deduction on qualifying R&D expenditure for another 10 years till YA2025. There will also be further tax deduction administered by the EDB for another five years till 31 March 2020.

With all the extension of PIC put in place for SMEs, there is no better time than now for businesses to fully participate in this scheme to increase their productivity and innovation.

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