IRAS publishes the fifth edition of the “Productivity and Innovation Credit” e-Tax Guide

On By taxsgIn Corporate Tax, Latest Tax News

26 November 2016

On 22 November 2016, the Inland Revenue Authority of Singapore (IRAS) published the e-Tax Guide, “Productivity and Innovation Credit (5th Edition)”.

Productivity and Innovation Credit (PIC) was introduced in Budget 2010 for Year of Assessment (YA) 2011 to YA 2015 to encourage productivity and innovation activities in Singapore. The scheme was further extended for three years till YA 2018 in Budget 2014.

In Budget 2013, an additional cash bonus (known as PIC bonus) was announced as part of a 3-year transition support package under the Quality Growth Programme. The PIC bonus has since lapsed after YA 2015.

In Budget 2014, a PIC+ scheme was introduced to provide support to small and medium enterprises (SMEs) that are making more substantial investments to transform their businesses.

As announced in Budget 2016, the PIC scheme will lapse after YA 2018. In addition, the cash payout rate has been reduced from 60% to 40% for qualifying expenditure incurred on or after 1 August 2016.

The amendments in the fifth edition of the e-Tax Guide incorporate the Budget 2016 changes:

  • Expiry of the PIC Scheme in YA 2018
  • Reduction in the PIC cash payout rate from 60% to 40% for qualifying expenditure incurred on or after 1 Aug 2016, and
  • Compulsory e-Filing of PIC cash payout applications with effect from 1 August 2016.

Other amendments include the following:

  • Removal of information on PIC bonus which expired after YA2015.
  • Removal of paragraph on the clarification of the basic tool criteria (See “The evaluation criteria for the case-by-case approval of automation equipment” (Annex A)).
  • Enhancement to allow companies to make an irrevocable election to claim the WDA over a five, ten or fifteen-year period (on a straight line basis) on capital expenditure incurred in acquiring the IPR – with effect from YA 2017 (See “Enhanced Writing-Down Allowance (WDA) and Deduction for Intellectual Property Rights (IPRs)” (Annex B).

The previous edition of the e-Tax Guide was published on 19 September 2014.

For full details, please refer to the e-Tax Guide on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore’s (IRAS) website. Visit http://www.iras.gov.sg/ for more information.