Productivity and Innovation Credit (PIC) provides enhanced tax deductions/allowances (net of grant or subsidy) for investments in a broad range of activities along the innovation value chain.
From YA 2011 to YA 2018, all businesses will be eligible for the PIC on 6 qualifying activities.
Please note that the PIC will expire after YA 2018.
Qualifying Activities | Brief description of qualifying expenditures under the PIC | Total deductions/ allowances under the PIC (as a % of qualifying expenditure) | Examples of qualifying expenditures |
Acquisition or leasing of certain automation equipment | Costs incurred to acquire/ lease prescribed automation equipment | 400% allowance/deduction for the first $400,000 of qualifying expenditure 100% allowance/deduction for the balance expenditure | Cost/Lease expenses of IT equipment such as fax machine, laser printer, computer and laptops Cloud computing payment Website development costs (including costs incurred for the one-time registration of a domain name for the website) from YA 2014 |
Training Expenditure | Costs incurred on: (i) In-house training; or (ii) All external training. | 400% tax deduction for the first $400,000 of qualifying expenditure 100% deduction for the balance expenditure | Salaries and other remuneration (excluding director fees) paid to in-house trainers for course delivery External course fees for staff Training of prescribed agents/representatives from YA 2012 Training of individuals under a centralised hiring arrangement from YA 2014 |
Acquisition and In-licensing of Intellectual Property Rights (IPRs) | Costs incurred to acquire IPRs for use in a trade or business (excluding EDB approved IPRs and IPRs relating to media and digital entertainment content) Costs incurred on IPR in-licensing from Years of Assessment 2013 to 2015 | 400% allowance for the first $400,000 of qualifying expenditure 100% allowance for the balance expenditure | Payment to buy a patented technology for use in manufacturing process Price paid for copyright |
Registration of IPRs | Costs incurred to register patents, trademarks, designs and plant varieties | 400% tax deduction for the first $400,000 of qualifying expenditure 100% deduction for the balance expenditure | Fees paid to Intellectual Property Office of Singapore (IPOS) to register trademark |
Research and Development (R&D) | Costs incurred in Singapore on staff costs and consumables for qualifying R&D activities carried out in Singapore or overseas | 400% tax deduction for the first $400,000 of qualifying expenditure 100%/150% deduction for the balance expenditure in Singapore | Salaries for R&D personnel and fees to R&D institute for creating a novel product |
Design projects approved by Design Singapore Council | Costs incurred in Singapore to create new products or industrial designs | 400% tax deduction for the first $400,000 of qualifying expenditure 100% deduction for the balance expenditure | Fees to engage in-house eligible designers or outsourced to eligible design service providers to carry out approved design activities |
For enhanced tax deductions, the expenditure cap of $400,000 per qualifying activity per YA can be combined across for YA 2016 to YA 2018 (i.e. $1.2 million per qualifying activity).
For PIC cash pay-out from YA 2016 to YA 2018, the expenditure cap of $100,000 per YA for all six qualifying activities cannot be combined across YA 2016 to YA 2018.
With effect from YA 2016, the three-local-employees condition has to be met for a consecutive period of at least three months prior to claiming the cash pay-out and put the PIC IT and Automation equipment to use. Previously, the three-local-employees condition was applied to the last month of the basis period for the qualifying YA for yearly application or last month of the quarter or combined consecutive quarters for quarterly application.
There is a reduction of PIC cash pay-out conversion rate for qualifying expenditure incurred on or after 1 August 2016 from 60% to 40%.