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Singapore Budget 2013: Productivity and Innovation Credit (PIC) Scheme Enhanced!


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The Singapore Government is offering companies additional incentives to improve productivity. It is enhancing the existing Productivity and Innovation Credit (PIC) scheme by introducing a new PIC Cash Bonus for participating firms.

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Singapore Budget 2013: Productivity and Innovation Credit (PIC) Scheme Enhanced!

  1. 1. ENHANCED PRODUCTIVITY AND INNOVATION CREDIT (PIC) SCHEMEAs announced in Budget 2013, for Years of Assessments (YAs) 2013 to 2015, businesses that invest in qualifyingactivities under the Productivity and Innovation Credit (PIC) scheme will receive a PIC Bonus.ABOUT PIC BONUSThe PIC Bonus gives businesses a dollar-for-dollar matching cash bonus for YAs 2013 to 2015, subject to anoverall cap of $15,000 for all 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% taxdeductions/allowances and/or PIC cash payout.The PIC Bonus is taxable.QUALIFYING CONDITIONSBusinesses eligible for the PIC Bonus are sole-proprietorships and companies that have:  incurred at least $5,000 in PIC qualifying expenditure[a] during the basis period for the YA in which a PIC Bonus is claimed;  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. 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: o Where 400% tax deductions/allowances on qualifying PIC expenditures is claimed – in the last month of the basis period for the YA to which the deductions/allowances relates. o Where PIC cash payout on qualifying PIC expenditure is claimed – in the last month of the quarter or combined consecutive quarters to which the cash payout option relates.[a] This refers to the amount net of grant or subsidy by the Government or any statutory board.
  2. 2. COMPUTING PIC BONUSYou will receive an equal amount in PIC Bonus on every dollar that you spend on qualifying activities, subjectto a cap of $15,000 over YAs 2013 to 2015.Example YA 2013 YA 2014 YA 2015Qualifying PIC $6,000 $3,000 $12,000ExpenditurePIC Cash Payout[1] $3,600 $1,800 $7,200 (60% x $6,000) (60% x $3,000) (60% x $12,000) [2] [3]PIC Bonus $6,000 $0 $9,000Total PIC Benefits $9,600 $1,800 $16,200[1] Computed based on 60% of qualifying PIC expenditure. In this example, the business applies for cash payout for YAs 2013 to 2015. Businesses that claim 400% tax deductions/allowances in any or all the three YAs will also be eligible for the PIC Bonus.[2] PIC Bonus is not given as qualifying PIC expenditure incurred during YA 2014 is less than $5,000.[3] PIC Bonus cap of $15,000 less PIC Bonus given in YA 2013 of $6,000.PAYMENT FOR PIC BONUSBusinesses do not need to apply for the PIC Bonus separately. Businesses can claim the PIC Bonus together inthe PIC cash payout application or the income tax return.Where 400% tax deductions/allowances is claimed in the income tax return [b]IRAS will compute the amount of PIC Bonus for each YA upon filing of the income tax return . Businesses canexpect to receive the PIC Bonus within 3 months from the date of receipt of the income tax return, provided allrequisite information is submitted together with the tax return. IRAS will start disbursing the PIC Bonus fromOctober 2013.[b] Sole-proprietors and partnerships also have to submit the PIC Enhanced Allowances/Deductions DeclarationForm for Sole-Proprietors and Partnerships together with their income tax return.Where PIC cash payout is claimed via the PIC Cash Payout Application FormIRAS will computer the amount of PIC Bonus upon approval of the PIC cash payout claim[c] submitted via thePIC Cash Payout Application Form. IRAS will generally approve the cash payout within 3 months from the dateof receipt of the application, provided all requisite information is submitted at the time of application.Businesses whose PIC cash payout applications for YA 2013 and/or YA 2014 have already been approved byIRAS will also receive the PIC Bonus. IRAS will start disbursing the PIC Bonus for these cases from July 2013.[c] Businesses can apply for the PIC cash payout up to four times a year (i.e. after the end of each quarter orcombined consecutive quarters).
  3. 3. IRAS will release more payment details by March 2013.FREQUENTLY ASKED QUESTIONS (FAQs)For more details, please refer to the FAQs on PIC Bonus.Please consult IRAS with any queries and for full terms and conditions of the enhanced PIC incentive.…