The ‘Productivity and Innovation Credit’ (“PIC”) was introduced in the Singapore Budget 2010 to provide significant tax deductions for investments in a broad range of activities along the innovation value chain. It covers six activities, one of which is ‘Investments in Design’. The component of the PIC that is related to Investments in Design (“PIC for Design”) aims to encourage pervasive and continuous design innovation in companies in Singapore. It is administered by the DesignSingapore Council (“DesignSingapore”).
Quick overview of eligible design projects:
From application to project completion…
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Businesses can enjoy 400% tax deductions/allowances on up to $400,000 of their expenditure per year in each of the six qualifying activities.
The annual expenditure cap of $400,000 may be combined as follows:
Year of Assessment (YA)
Expenditure Cap per Qualifying Activity
Tax Deduction per Qualifying Activity
2013 to 2015
(400% x $1,200,000)
2016 to 2018
For more information about the application for 400% Tax Deductions/Allowances, please refer to IRAS' website (www.iras.gov.sg).
As announced in Budget 2014, from YAs 2015 to 2018, qualifying businesses can enjoy 400% tax deductions/allowances on up to $600,000 (instead of $400,000 as mentioned above) of their expenditure per year in each of the six qualifying activities under the PIC+ scheme.
The annual expenditure cap of $600,000 per qualifying activity may be combined as follows:
(400% x $1,400,000)
2016 to 2018
(400% x $1,800,000)
For more information about the application for PIC+ Scheme for SMEs, please refer to IRAS' website (www.iras.gov.sg).
Eligible businesses can apply to convert up to $100,000 of their total expenditure for each YA in all the six qualifying activities into a non-taxable cash payout. The cash payout rate is at 60% of the expenditure incurred.
The maximum cash payout is calculated as follows:
Expenditure Cap for ALL Qualifying Activity
Cash Payout Rate
2013 to 2018
(Cap cannot be combined)
$100,000 per YA
$60,000 per YA
(60% x $100,000)
Conditions for cash payout option
Businesses eligible to opt for the cash payout are sole-proprietorships, partnerships, companies (including registered business trusts) that have:
For more information about the application for cash payout option, please refer to IRAS' website (www.iras.gov.sg).
The PIC Bonus gives businesses a dollar-for-dollar matching cash bonus for YAs 2013 to 2015, subject to an overall cap of $15,000 for all 3 YAs combined.
This is given on top of the existing 400% tax deductions/allowances and/or 60% cash payout ("PIC cash payout") under the PIC scheme. To enjoy the PIC Bonus, businesses must have made a claim for the 400% tax deductions/allowances and/or the PIC cash payout.
For more information about the application for PIC Bonus, please refer to IRAS' website (www.iras.gov.sg).
Businesses can opt to defer a dollar of current YA tax for every dollar of PIC qualifying expenditure incurred for the current financial year, up to a cap of $100,000. This tax will be deferred and is due for payment when the first assessment for the following YA is raised. This tax deferral allows businesses to enjoy their PIC benefits one year in advance.
For more information about the application for the tax deferral option, please refer to IRAS' website (www.iras.gov.sg).
For the PIC for Design, businesses can conduct eligible design projects either:
In-house activities of Design Projects [Conducted by Designer(s)]:
100% of the manpower costs to conduct activities of Design Projects will qualify.
Manpower costs refer to any salary, wages and other benefits paid or granted in respect of employment (excluding director’s fees), whether in money or otherwise, to any designer for carrying out activities of the Design Projects.
Where a Designer is not engaged in activities of Design Projects on a full time basis, only that part of the manpower costs attributable to the time spent by the Designer on the activities of Design Projects will be eligible.
For Outsourced activities of Design Projects [Conducted by Design Service Provider(s)]:
60% of the invoiced amount to conduct activities of Design Projects will qualify. Where a cost breakdown to indicate that manpower costs exceed 60% of the invoiced amount is provided, 100% of the eligible manpower costs for carrying out activities of Design Projects will be eligible. The corresponding conditions for In-house activities of Design Projects done by a Designer will apply (Refer to above).
*Note: Qualifying expenditure on approved Design Projects must be net of grants and subsidies.
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