Some Important Facts About PIC Grant in Singapore
Singapore Government has provided great support to local business industry, helping business owners to grow their business in Singapore. One of many supports from government is providing grants to businesses, of which Productivity and Innovation Credit grant is one of the grants provided. This is a grant, offered by the Inland Revenue of Singapore (IRAS), specially created for all entrepreneurs and businesses who want to contribute to Singapore’s economy and commercial growth.
What is PIC?
Before we discuss more about this grant, you may want to learn about this grant. This credit is actually created to offer considerable tax deduction for most business owners today. You are able to deduct your tax by doing some investments in several activities that are related with innovation. This grant is specially offered for all small and medium enterprises (SMEs) who want to grow successful business in Singapore. When this grant is used properly, it can be used to improve the innovation and productivity in most companies that are available in Singapore today.
Who Can Get This PIC Grant?
You should understand that there are some people who are eligible for this grant. All types of businesses are eligible for this grant. However, they need to have any incurred expenses that are included in these 6 qualifying activities, including
– Training of employees in many different fields or departments
– For The purchasing or leasing of automation equipment, the equipment must be prescribed in the PIC IT and Automation Equipment List or approved by IRAS on a case-by-case basis.
– PIC will cover the acquisition and in-licensing cost of qualifying IPRs. For the registration costs, it will be for the registration of patents, trademarks, design and plant varieties.
– Any project designs that are approved by the DesignSingapore Council
– For research and development activities, the activities must meet the definition under Section 2 of the income Tax Act to qualify for PIC.
What Are Some Types of PIC Grant Options That Are Available?
This is another important thing that you should know about PIC grant. When you want to get this PIC grant, you should learn about some available options. There are two main options that are available in this country today. They are tax deduction and cash payout option. You should learn about both types of PIC grants, in order to achieve all benefits of both options. Don’t forget to compare some available pros and cons from both options, so you can choose the right option for yourself.
a. Tax deduction
This is the first option that is available for all business owners. When you apply for the PIC grant with this option, you are able to get up to 400% tax deduction from any activities that are eligible for the PIC grant. It is important to calculate the overall tax deduction that you can get from your productivity and innovation credit (PIC).
b. Cash Payout Option
When you want to have cash payout, you need to submit the payout application that is provided by the IRAS. You are able to get cash payout for up to $100,000 of expenditure every year. Make sure that you calculate the overall expenses that you have in your current year of assessment.
The Qualifying Period
When you want to know about the PIC, you should understand about this detail. It is very important for you to learn about the qualifying period of your PIC grant. This scheme will be operational for a complete 5 years starting from year of assessment (YA) 2015 to 2018. It is important to claim the PIC based on the right assessment period, in order to accelerate the evaluation process. All applicants need to know about the qualifying period, so they can avoid getting any problems in the future.
What Are Some Conditions for Cash Payout?
If you want to get cash payout from your PIC grant, you need to take a look at some additional requirements. It is important that you follow these requirements, so you can complete the cash payout application immediately. All businesses that are eligible for getting the cash payout option should be sole-proprietorships, partnerships, or companies. They should also meet some of these requirements.
– You should have an active business that is operating in Singapore. Your business should be active in the qualifying year of assessment, so you can apply for the cash payout application easily.
– Your business should also have some qualifying expenses that are permitted in the PIC grant scheme. It is important to check the list of eligible expenses, in order to make sure that all expenses can be included in the cash payout option. All expenses should be eligible in the main period of the right Year of Assessment.
– Your company should have at least 3 local employees that are Singapore citizens. You should understand that this rule is not applicable for shareholders, sole-proprietors, directors, and also partners. This rule is created to boost the economy and productivity of most Singapore citizens today.
How Can You Learn More About PIC Grant?
It is very important for you to learn about PIC grant, so you can get all benefits from this option. It is important for you to meet IRAS consultants to discuss about your business needs. They are ready to provide free and close-up conversation for all customers who want to learn about this PIC scheme. You should be able to learn more about this grant scheme and all related benefits after having some consultation sessions with these consultants. You can also attend some training sessions that are held by IRAS for teaching all business owners about this scheme.
They are some important things that you have to know about PIC grant. You can also contact PIC Claim Singapore for asking any subjects related with this grant. This company has some professional consultants who are ready to help you learn about the productivity and innovation credit (PIC) grant. Don’t forget to follow all updates and information about this grant, so you can get the latest updates about this scheme. When you plan to apply for this grant, you need to have enough skills and knowledge about this subject.
Leasing of PIC IT and
Acquisition and Licensing of Intellectual Property Rights
Registration of Patents, Trademarks, Designs and Plant Varieties
Research and Development
Investment in Design Projects
There are two ways you can benefit from your spending in any of the six qualifying activities.
Option 1: Cash Payout
Convert up to $100,000 of your total spending in all six qualifying activities into a non-taxable cash payout instead of claiming tax deduction.
This option is generally more beneficial for businesses with low or no taxable income.
The maximum cash payout is $60,000 (60% x $100,000) for each YA from YA 2013 to YA 2018.
To qualify for cash payout, your business must:
- have employed at least three local employees (Singapore Citizens or Permanent Residents with CPF contributions, excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company) in the relevant month(s); and
- carry on business operation in Singapore.
From YA 2016 to YA 2018, if you are claiming cash payout on PIC IT and Automation Equipment, the equipment must be used by your business at the point of electing for cash payout.
Option 2: 400% Tax Deduction
Enjoy 400% tax deduction3 on up to $400,000 of your spending in each of the six qualifying activities per YA. This means a tax deduction of up to $1.6 million ($400,000 x 400%) for each activity per YA.
At the corporate tax rate of 17%, your tax savings can be up to $272,000 for each activity per YA.
From YA 2015 to YA 2018, qualifying SMEs can enjoy an additional $200,000 in qualifying expenditure for each of the six activities per YA. This means that the cap of $400,000 referred to above is increased to $600,000.
In addition, you can combine your spending across YAs for each qualifying activity to enjoy the maximum PIC benefits as follow: To be a qualifying SME, your business must: • carry on operation in Singapore; and • have revenue of not more than $100 million or employment size of not more than 200 employees. This criterion will be applied at the group level if your business is part of a group.
The PIC Grant strive to encourage more companies to adopt the PIC scheme by investing in innovation and productivity. Businesses that spend for a minimum amount of $400 in PIC activities in a year will get to receive 60% of the cost in cash rebate from IRAS PIC or 400% tax deduction.
Facts on PIC Grant – by IRAS
Below are facts extracted from IRAS website, which you are free to verify. There is more information available from IRAS
to help you understand more about PIC grant. From time to time, IRAS may update more details about PIC grant, and the
information here may not be the latest.
Invest in PIC
400% Tax Deduction (Up to $400,000 spending per year Claim in business’
income tax return
Submit “PIC Cash
form to IRAS.
Example: Non-Taxable Cas Payout = $50,000 x 60%
Convert up to $100,000 spending per year into
Cash Payout @60%
*Applicable form YAs 2013 toi 2015. Aconversion rate of 50%
applies for YAs 2011 and 2012
Example: Deduction = $50,000 x 400% = $200,000
1. Who is eligible for PIC?
2. What is the qualifying period for PIC?
3. Conditions for cash payout
All businesses are eligible for PIC, if they have incurred expenditure in any of the six qualifying activities.
Branches and subsidiaries with the parent or holding company being a foreign incorporated company are also eligible for
A business is considered to have met the 3-local-employees condition if it contributes CPF on the payroll of at least 3
local employees in the relevant month.
The PIC scheme is effective for five years from YA 2011 to YA 2015.
For example, if you incurred qualifying expenditure in Nov 2010 and your accounting year ended on 30 Jun 2011, you
are eligible to claim PIC in your Income Tax Return for YA 2012.
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
4. Has IRAS approved or endorsed consultants
to provide advice on or promote the PIC scheme?
PIC Grant – Information Technology Software
Data communications and networking equipment, including modem, multiplexor, network processor, servers,
interface converter, routers, switches, networks, cabling infrastructure, IP telephony systems, broadband connectivity
equipment and security and authentication infrastructure.
There are Six Qualifying Activities eligible under PIC, and one of them is “Acquisition or Leasing of PIC
Information Technology (IT) and Automation Equipment.” We extract the key point here for your easy reference –
Message from Verz Design: The above is reference for Hosting Server.
Message from Verz Design: The above is reference for eCommerce, Product Inventory, Custom Programming.
IRAS and the Enterprise Development Centres (set up jointly by SPRING and industry
associations/business chambers) provide free one-to-one consultation for businesses that wish to learn more about PIC.
IRAS has not appointed any private entity (individual or company) to provide advice on or promote the PIC scheme. IRAS
has also not approved or endorsed any private consultant for this purpose.
Message from Verz Design: Verz Design does not charge any consulting fees for application of PIC grant, and the
application of PIC grant has to be filed by clients themselves. Beware of consultants who claim they can file PIC grant on
your behalf and charging a service fee.
“Information technology software including office system software and software used in connection with provision of any
office automation service, enterprise resource planning, customer relationship management such as reservations,
registration, queue management, ordering, billings and collections, inventory management, record management, knowledge
management, human resource and payroll management, financial information and business management such as
accounting and assets management, and personnel business travel request, information and management.
Website: www.iras.gov.sg (Businesses > For companies > Productivity and Innovation Credit)
Helpline: 1800-356 8622 (For Companies) | 6351 3534 (For Self-Employed/Partnership)
Contact Us today to understand if your web development qualifies for PIC Grant
Our Hotline: +65 6841 1680
For more information on PIC, please feel free to contact IRAS:
What to note when applying for PIC Cash Payout?
- Once the qualifying expenditure is converted to cash, it cannot be claimed as tax deductions/allowances.
- Election to convert qualifying expenditure to cash is irrevocable.
- The minimum qualifying expenditure for each application is $400.
- Qualifying expenditure to be converted to cash is the amount net of grant or subsidy by the Government or any statutory board, and includes grant or subsidy pending approval.
Common Mistakes to Avoid:
The Following Item are NOT considered IT and Automation Equipment, and cannot be claimed:
- Uninterrupted Power Supply (UPS)
- Renovation and Refurbishment Cost
- Furniture & Fittings
- Motor Vehicle
- Closed Circuit TV (CCTV)
- Digital Camera
- Air Conditioning Unit purchased from Retail Shop
Claiming on Non Qualifying Expenditure
- Course Fee on Training attended by Business Owner
- Get paid by a GST Registered Business on an item qualifying for PIC
- Cost of PIC IT and Automation Equipment not incurred during relevant accounting Accounting Period Year of Assessment (YA) of claim
- Cost not applicable to PIC, including Warranty Fee, Service Maintenance Fee
- Domain Name Purchase
- Website Server Maintenance Cost