Productivity and Innovation Credit (PIC)

Under the Productivity and Innovation Credit (PIC) scheme, your business can enjoy either a 400% tax deductionor60% cash payout

400% Tax Deductions/Allowances

How it works

Businesses can enjoy 400% tax deductions/allowances on up to $400,000 of their expenditure per year in each of the six qualifying activities, instead of the 100% deductions/allowances under the existing tax rules.The annual expenditure cap of $400,000 may be combined as follows:

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

PIC+ Scheme

As announced in Budget 2014, from YAs 2015 to 2018, qualifying businesses can enjoy 400% tax deductions/allowances on up to $600,000 (instead of $400,000 as mentioned above) of their expenditure per year in each of the six qualifying activities under the PIC+ scheme.

The annual expenditure cap of $600,000 may be combined as follows:

Year of Assessment (YA) Expenditure Cap per Qualifying Activity* Tax Deduction per Qualifying Activity
2013 and 2015 (Combined) $1,400,000# $5,600,000 (400% x $1,400,000)
2016 and 2018 (Combined) $1,800,000 $7,200,000 (400% x $1,800,000)

How to claim tax deduction

Businesses can make the claim for deductions/allowances in their income tax return for the relevant YA by the filing due date (15 Apr for sole-proprietorship and partnership; 30 Nov for company).

Sole-proprietors and partnerships also have to submit the PIC Enhanced Allowances/Deduction Declaration Form for Sole-Proprietors and Partnershipstogether with their income tax return.

Cash Payout Option

How it works

Eligible businesses can apply to convert up to $100,000 of their total expenditure for each YA in all six qualifying activities into a non-taxable cash payout. The cash payout rate is 60% of qualifying expenditure incurred.

The cash payout option is to support small and growing businesses, which may be cash-

Year of Assessment (YA) Expenditure Cap for All Qualifying Activities Cash Payout Rate Maximum Cash Payout
2011 and 2012(Combined) $200,000* 30% $60,000 (30% x $200,000)
2013 to 2015(Cap cannot be combined) $100,000 per YA 60% S60,000 per YA (60% x $100,000)
2016 to 2018(Cap cannot be combined) $100,000 per YA 60% S60,000 per YA(60% x $100,000)

constrained, and encourage them to innovate and improve productivity.

The maximum cash payout is calculated as follows:

Conditions for cash payout

Businesses eligible to apply for the cash payout are sole-proprietorships, partnerships, companies (including registered business trusts) that have:

  • Active business operations in Singapore
  • At least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions) excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company.
  • Incurredqualifying expenditure and are entitled to PIC during the basis period for the qualifying YA
  • An expense is incurred when the legal liability to pay has arisen, regardless of the date of actual payment of the money.

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