Increase Productivity with PIC Grant and Reduce Costs

As the business environment becomes increasingly competitive, productivity becomes key to improving your operating margin. In view of the current situation, the Singapore government has also implemented various initiatives to meet this need, one of which is the newly enhanced Productivity and Innovation Credit (PIC) scheme. The PIC scheme is a form of cash grant targeted at the small and medium enterprises (SMEs) in Singapore. Companies can use the PIC scheme for various aspects of their businesses, including procuring one of the best all-in-one Fuji Xerox printers. Increase your productivity today by exploring the PIC scheme and see how beneficial it is for your business.

Although the PIC scheme was slated to expire in YA2015, the recent Budget has extended its term to YA2018, with some other enhancements. Read on to learn more about the enhanced PIC scheme.

The scheme is not applicable to:
- Investment holding companies
- Service companies which do not derive arm length fees
- Dormant companies (do not carry out active business operations)

What is the Productivity and Innovation Credit (PIC) scheme about?

The Inland Revenue Authority of Singapore (IRAS) introduced the PIC scheme to encourage businesses to invest in a broad range of activities to improve innovation and productivity. The scheme is open to all businesses, including branches and subsidiaries of foreign incorporated companies operating in Singapore, provided they incur expenditure in any of the six productivity improvement activities stipulated by IRAS. In YA 2013, the Singapore government further enhanced the scheme to attract and motivate more businesses to invest in innovation and productivity. (For more details, see point 4 under "Eligible Claims under PIC".)

Which are the six productivity improvement activities that qualify for the PIC? 

  1. Purchase/ Lease of Automation Equipment
    Costs incurred by purchasing and/or leasing any automation equipment can be subsidised under the PIC scheme. This includes the Fuji Xerox Multifunction Printer equipped with cutting-edge technological features that enables maximisation of productivity, reliability and security. The Fuji Xerox Multifunction Printer solution is the answer to your heavy volume of daily office projects. 

  2. Training of Employees
    Covers all costs of in-house and outsourced employee training programmes that result in an upgrade of skills.

  3. Research and Development (R&D)
    Funds R&D activities undertaken in the pursuit of innovation and productivity enhancement.

  4. Approved Design Project
    Conducted by the Design Singapore Council, approved design activities encompass those that are carried out by your company or an external approved vendor.

  5. Acquisition of Intellectual Property Rights (IPR)
    Subsidises the acquisition of the legal and economic ownership of the IPR for your business use, including patents and copyrights.

  6. Registration of Intellectual Property Rights (IPR)
    Provides funding for the registration and professional fees incurred for the registration of patents, trademarks, designs and plant varieties.

Eligible Claims under PIC

  1. Tax Deduction. 
    Eligible companies can get 400% tax deduction of up to $400,000, as compared to the usual 100% deduction under existing tax rules. Annual spending caps across YAs may also be combined to achieve better savings. Qualified organisations with minimal taxable income can opt to receive a cash rebate of up to $60,000 per YA, based on 60% of expenditure cap of $100,000.

  2. Tax Deferral 
    Companies with cash flow and investment needs can choose to defer tax payments (of up to $100,000) until the following year for the qualified amount incurred from YA 2015-2018.

  3. PIC +
    Enjoy 400% tax deductions on an additional $200,000 in expenditure for each qualifying activity per Year of Assessment from (YA) 2015 to 2018. Expenditure cap increased to $600,000 per qualifying activity per YA To qualify, businesses (sole proprietorships, partnerships, companies) should have an
    -*Annual turnover of not more than $100million OR employment size of not more than 200 workers
    -Criterion will be at the group level if the business is part of a group

An sample case study on how the PIC scheme can benefit your business:

Scenario: Your company spends $10,000 in the procurement of a Fuji Xerox Multifunction Printer.

Cost Savings Options Under the PIC Scheme: Option 1. Choose to receive 400% of costs incurred in tax deduction. OR Option 2. Convert 60% of your expenditure into cost rebate and receive it in cash.

Results: Option 1.Enjoy $6,800 in tax deduction and cut cost by reducing overall business tax. OR Option 2. Increase business cash flow with $6,000 in cash payout.

Conclusion: Both scenarios put your business in a more advantageous situation as compared to a previous scenario without the PIC scheme, where your company will only get to enjoy $1,700 in tax savings.

With the enhanced PIC scheme, your company will also receive 400% tax deductions on an additional $200,000 expenditure for each qualifying activity on top of the above benefits, provided the purchase is made between YA 2015 to 2018. Expenditure cap increased to $600,000 per qualifying activity per YA. This will give your company additional cost savings and more cash flow for other operation expenditures.

Fuji Xerox understands the needs and intricacies of running a business, and our account managers will be happy to assist with your claiming process. By leveraging on these business-enabling schemes, Singapore businesses will definitely have an advantage in its pursuit towards innovation and productivity.


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