IRAS Provides Productivity and Innovation Credit Bonus Details

by Mary Swire, Tax-News.com, Hong Kong

06 March 2013

The Inland Revenue Authority of Singapore (IRAS) has clarified the terms of the Productivity and Innovation Credit (PIC) Bonus, which was announced in Singapore’s 2013 Budget on February 25, and is aimed at helping companies to enhance their productivity in a period of economic transition.

From the 2013 to the 2015 assessment years, businesses that invest in qualifying activities may 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.

Qualifying productivity improvement activities include the acquisition or leasing of information technology and automation equipment; the training of employees; the acquisition and in-licensing of intellectual property rights; the registration of patents, trademarks and designs; research and development activities; and design projects approved by the DesignSingapore Council.

The PIC Bonus, which is taxable, will be subject to an overall cap of SGD15,000 (USD12,040) for all three tax years combined, and businesses must have already made a claim for the PIC tax deductions/allowances and/or cash payout.

No separate application is therefore required, as the claim for the PIC Bonus should be made together with the PIC tax deduction/allowance in an income tax return, or within a PIC cash payout application.

Businesses eligible for the PIC Bonus are sole-proprietorships, partnerships and companies that have incurred at least USD5,000 in PIC-qualifying expenditure during the basis period for the assessment year in which a PIC Bonus is claimed; have active business operations in Singapore; and have at least three local employees (Singapore citizens or Singapore permanent residents with pension fund contributions), excluding the sole-proprietors, partners under contract for service and shareholders who are directors of the company.

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