Wednesday 13 August 2014

Are you a Singapore SME looking to boost productivity using PIC Bonus ?

A must read for Singapore SME on how they can boost productivity using IRAS PIC Bonus

Customised Software Solutions for SME

“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?

Srivatsan Aravamudan

Srivatsan Aravamudan

Design and Communication

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