A must read for Singapore SME on how they can boost productivity using IRAS PIC Bonus
“The Productivity and Innovation
Credit (PIC) scheme is due to expire in Year of Assessment (YA) 2015. There
have been many calls for its extension. I have decided to extend the PIC scheme
for another three years until YA2018. This extension will cost the Government a
total of $3.6 billion. “- 2014 Budget speech, Finance Minister Tharman
Shanmugaratnam
A big round of applause to Singapore government for
announcing such inviting and encouraging schemes to help businesses,
particularly small medium enterprises (SME) companies in Singapore to maximize
saving and improve productivity.
“Singapore Business can enjoy 400%
tax deductions/ allowances and/or 60% cash payout for investment in innovation
and productivity improvements under the Productivity and Innovation Credit
(PIC) scheme. The tax benefits under PIC
are available from Years of Assessment (YAs) 2011 to 2018, for investment in
any of the six qualifying activities. From YAs 2013 to 2015, your business can
also enjoy a PIC Bonus, a dollar-for-dollar matching cash bonus given on top of
the existing 400% tax deductions/ allowances and/or 60% cash payout.”
While many companies are already using this scheme to
acquire office equipments like printer or scanner, it’s imperative to understand the objectives behind
the scheme and appreciate the fact that it’s generously provided to improve overall
productivity.
One of the main problems of SME is to leverage on low cost
strategies and expand the business at the same time. The expansion bottlenecks
varies from understanding the customer better to improving the internal
functions to serve the customer better.
It’s very expensive to analyze extensive data from multiple sources to
understand the customer, however the opportunity cost of not doing it is
further more expensive. Secondly, improving the internal functions to serve customer better needs design
intervention and applications that can be customized to not only solve the
current issue but provide innovation and ease in the way the operations are
carried out.
The fact that SME can use it to develop website, cloud basedweb apps or mobile apps and get 60% cash payout or 400% tax deduction is great
opportunity to start investing on customized web based applications. Ensure
that you hire the right consultant so that the development activities are 100%
in align with Singapore PIC’s objective.
Sole-proprietorships, partnerships and companies that have
active business operations in Singapore;
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-employee condition if
it contributes CPF on the payroll of at least 3 local employees:
Incurred at least $5,000 in PIC-qualifying expenditure*
during the basis period for the YA in which a PIC Bonus is claimed;
Productivity improvement activities covered in PIC
funding
Purchase or leasing of PIC IT & Automation Equipment
Training of employees
Acquisition of Intellectual Property Rights
Registration of patents, trademarks, designs and plant
varieties
Research and development activities
Design projects approved by Design Singapore Council
What did you do to enhance the workplace productivity in your organisation? why not comment below and share it with us?
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