PIC or ‘Productivity and Innovation Credit’ was introduced in Singapore Budget 2010 to encourage business productivity and innovation.
Subject to conditions, businesses may claim 400% deduction/allowance or 60% Cash Payout for qualifying expenditure. PIC became more attractive when PIC Bonus was introduced to give businesses an additional cash bonus of up to $15,000 for Year of Assessments 2013 to 2015 and PIC Plus allows a business to claim up to $600,000 expenditure per activity per Year of Assessment.
Penalties for Abusing PIC
Due to the substantial tax deduction &/or allowance or cash payout, some businesses had abused the scheme and were prosecuted by the IRAS. The penalties are as follows:
|S37J, S95 & S96 of SITA||Negligence / Carelessness||Evasion|
|Max Penalty (% of tax undercharged or PIC cash payment or bonus)||200%||400%|
|Max Jail Term||3 years||5 years|
First 3 Prosecution Cases for PIC Abuse
1. Greenit Pte Ltd
2. Exel Mitsui Technologies Pte Ltd
3. Media Grafix
Engage a Professional
It is advisable to engage a qualified tax professional for PIC application as they are familiar with the conditions and the “do”s and “don’t”s . If the PIC claim is relating to external training and IT equipment under prescribed list, it should be pretty straight forward to apply. However, you may wish to consult the tax professionals on the following PIC applications:
- IT equipment not listed in IRAS prescribed list where pre-approval from IRAS is required.
- Research and Development
- Intellectual Property
See also IRAS queries on PIC.