Singapore’s 2013 budget comes at a time when “raising productivity” is the buzz word and businesses here are coming to terms with the government’s no U-turn stance on foreign labour. To encourage businesses to undertake investments in productivity and innovation, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam has announced a Productivity and Innovation Credit (PIC) Bonus in his budget speech. Singapore company registration specialist Rikvin analyses the affect it will have on businesses in Singapore.
Under the PIC Bonus scheme, eligible businesses (with active business operations in Singapore with at least 3 local employees) that spend a minimum of S$5,000 in qualifying PIC investments in a financial year will receive a dollar-for-dollar matching cash bonus. The bonus is capped at $15,000 for the 3-year period between 2013 and 2015 and will be given in addition to the existing PIC benefits of 400% PIC tax deductions (up to $400,000 in expenditure for each PIC qualifying activity); or cash payout at 60% on up to $100,000 of the qualifying expenditure. The PIC Bonus is taxable and businesses don’t need to apply for it separately. They can claim the bonus with their PIC cash payout applications.
Moreover, the government has further liberalised the scope of automation equipments that can qualify for PIC benefits, along with enhancing the scheme to include Intellectual Property (“IP”) in-licensing. The term “automation equipment” is changed to “IT and automation equipment,” while the current PIC qualifying activity of “Acquisition of Intellectual Property” is renamed to “Acquisition and In-Licensing of Intellectual Property” to reflect the change.
From now on, even a basic tool can qualify as an “equipment” under the PIC scheme if it increases productivity compared to the existing equipment used in the business; or if it has not been used in the business before. The government will also be updating and expanding the equipment list regularly based on the feedback from businesses.
Rikvin is positive that this measure may propel more and more Singaporeans to start their entrepreneurial journey and opt for Singapore company formation.
In addition, the enhanced PIC framework will now allow investing firms to enjoy zero corporate tax even as their taxable income is registered at S$28 million.
Commenting on the measures, Ms. Christine Lim, General Manager of Rikvin, said, “It is a very important step in helping the SMEs, which provide for 70% of the jobs in Singapore, manage their cash-flow needs while undertaking productivity and innovation initiatives, or license IP rights. The government is clearly indicating that raising productivity is not just an important economic priority, but it also enables us to build a better and inclusive society.”Tags: PIC Scheme, Singapore company setup, Singapore corporate tax