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Singapore Warns Firms Over PIC Compliance

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

20 May 2013


With concerns being expressed that the coupling of the Productivity and Innovation Credit (PIC) cash payout and bonus may lead to consultants and vendors inflating their prices to abuse the scheme, the Inland Revenue Authority of Singapore (IRAS) stressed that it will not hesitate to take action against any offenders.

As was announced in Singapore's 2013 Budget, with the aim of helping companies to enhance their productivity, 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 percent tax deductions/allowances and/or 60 percent cash payout, from the 2013 to the 2015 assessment years.

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, is subject to an overall cap of SGD15,000 (USD12,000) 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.

IRAS has made the point that it has kept the application processes for PIC simple and straightforward to encourage businesses, particularly small and medium enterprises (SMEs), to benefit from the scheme. That is why many SMEs have filed their PIC claims without the help of consultants. While some businesses, however, have chosen to engage consultants to help them with their PIC claims, IRAS stressed that, regardless of whether they do so on their own or with the help of consultants, businesses are responsible for the accuracy of the claims.

In its outreach programs, IRAS emphasizes the need to make accurate PIC claims and the consequences for making fraudulent claims. It is in the process of disseminating information to trade/industry associations on the common mistakes made by businesses and consultants on their PIC claims, and has put out the same information on its website.

However, it takes "a serious view of any attempt by PIC claimants, vendors or consultants to artificially inflate the value of the PIC expenditure or investment, purely to abuse the PIC scheme," and "will not hesitate to take action against the offenders, including bringing them to court."

TAGS: court | compliance | tax | business | trademarks | patents | tax compliance | law | intellectual property | Singapore | tax credits | licensing | trade | research and development

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