The Productivity and Innovation Credit (PIC) Scheme was introduced in the Singapore Budget 2010 to help SMEs achieve significant tax deductions or payouts for investments in research & development, innovation, automation and training.

In 2011 this year, the PIC Scheme has been further enhanced in Singapore's 2011 Budget to provide tax benefits for investments by businesses in a broad range of activities along the innovation value chain. The tax benefits under PIC will be effective from 2011 up till 2015.

All businesses can enjoy deduction/allowances at 400% and/or 60% cash payout for investment in innovation and productivity improvements under PIC Scheme instead of the 100%/150% tax deduction/allowances under the existing tax rules.

SMEs in Singapore can thus be looking at 68% Tax Savings on money spent within the areas of the 6 qualifying activities. Thus for every $10,000 paid out by an SME, it will only cost them $3,200 after tax savings. It is a great opportunity for SMEs to take advantage of the 400% tax deduction/allowance or 60% cash payout to look at what can be done to improve their businesses at a low cost.

From YAs 2013 to 2015, your business may also further enjoy a PIC Bonus, a dollar-for-dollar matching cash bonus given on top of the existing 400% tax deductions/ allowances and/or 60% cash payout.

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

• Incurred qualifying expenditure and are entitled to PIC during the basis period for the qualifying YA;
• Active business operations in Singapore; and
• 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.

Click here to know more about the PIC cash payout conditions.

The PIC Bonus gives businesses a dollar-for-dollar matching cash bonus for YAs 2013 to 2015, subject to an overall cap of $15,000 for all 3 YAs combined.

This is given on top of the existing 400% tax deductions/allowances and/or 60% cash payout ("PIC cash payout") under the PIC scheme. To enjoy the PIC Bonus, businesses must have made a claim for the 400% tax deductions/allowances and/or the PIC cash payout.

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Yes, PIC benefits are net of grant or subsidy. The expenditure qualifying for PIC benefits (enhanced deduction or cash payout) is the amount net of grant or subsidy by the Government or any statutory board.

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