This page tells you how your 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.
Find out more about the PIC scheme in the table below.
Things to Look Out for If Engaging Consultants to File PIC Claims
The PIC application process is simple and straightforward. To guide businesses in filing PIC cash payout claims, IRAS has published on its website a list of common mistakes to avoid when claiming PIC. Most businesses file their PIC cash payout claims themselves, but there may be businesses that prefer to engage PIC Consultants to assist them in claiming PIC benefits. Find out what you need to look out for if you are engaging consultants to file PIC claims.
Signs that you could be asked to participate in an unacceptable PIC arrangement New!
Vendors, salespersons and consultants may approach you and offer to help you claim PIC cash payout if you buy their products/ engage their services. Please be especially mindful of those who misrepresent the intention of the PIC scheme. Here are some signs that you could be asked to participate in an unacceptable PIC arrangement.
If you make incorrect PIC cash payout claims based on wrong advice by vendors, salespersons and consultants, you will face penalties as you are ultimately responsible for the accuracy of your PIC application. Please refer to the IRAS website or contact IRAS for assistance if you are unclear about the PIC scheme or wish to verify if the advice given to you by vendors, salespersons or consultants is accurate.
For PIC Consultants and Vendors New!
Find out what you need to know if you are a PIC Consultant or Vendor.
IRAS takes a serious view of any abuse of PIC scheme
IRAS takes a serious view of taxpayers who defraud the government. Offenders convicted of PIC fraud will have to pay a penalty of up to four times the amount of cash payout fraudulently obtained, and a fine of up to $50,000 and/or imprisonment of up to five years. This includes any person who wilfully assist another person to obtain a cash payout or PIC bonus which he is not entitled to.
List of offenders convicted of PIC abuse:
Measures to curb PIC abuses
IRAS has come across business arrangements aimed at artificially creating or inflating PIC claims. While such cases make up a minority of PIC claims, the following anti-abuse measures have been introduced to target abusive arrangements and intermediaries that promote or facilitate such arrangements:
- Deny PIC benefits arising from abusive arrangements as follows:
|Where the arrangement is abusive because
||Amount of PIC benefits disallowed
|It consists or makes use of artificial, contrived or fraudulent step(s)
||That part of PIC benefits that arises from the use of the artificial, contrived or fraudulent step(s)
|The amount paid for the goods/ services exceeds their open market value for no bona fide commercial reason
||PIC benefits computed based on the difference between the amount paid by the business and the open market value
|There is no bona fide commercial reason for entering into the arrangement
||Full amount of PIC benefits
- Impose penalties on intermediaries (including vendors and consultants) who know, or have reasonable grounds to believe that the arrangements they are promoting are abusive PIC arrangements. Convicted offenders will have to pay a fine of up to $10,000 and/ or imprisonment of up to three years.
Abusive PIC Arrangement
A PIC arrangement is abusive if:
- it makes use of artificial, contrived or fraudulent step(s) to obtain PIC benefits;
- the arrangement results in the payment of goods/ services for an amount that exceeds the open market value without a bona fide commercial reason; or
- there is no bona fide commercial reason for entering into the arrangement, apart from getting the PIC benefits.
For example, Business A sends its employees for a training course. The course fee includes both the value of the training and the value of other goods to be given to the trainees (e.g. a watch as a door gift). To enable Business A to claim PIC benefits on the goods, the course provider added the value of the goods to the course fee charged. This arrangement is an abusive PIC arrangement as the purpose for setting the price in such a way is to help Business A obtain a higher PIC benefit.
Please refer to Annex H of the e-Tax Guide "Productivity and Innovation Credit (736KB)” for more examples of abusive PIC arrangements.
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Please contact us for assistance or clarification on PIC.
- Email address:
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