General Rules for Six Qualifying PIC Activities
PIC benefits are given only when the qualifying expenditure has been incurred by the business. An expense is incurred when the legal liability to pay has arisen, regardless of the date of actual payment of the money. For more information and examples of when an expense is incurred, please refer to Examples of when an expenditure is considered incurred (101KB).
Acquisition and Leasing of PIC IT and Automation Equipment
This refers to costs incurred in acquiring or leasing PIC IT and Automation Equipment.
Only equipment in the prescribed PIC IT and Automation Equipment List (233KB) qualify for PIC under the activity “Acquisition and Leasing of PIC IT and Automation Equipment”. Businesses that invest in equipment not in the prescribed list but that serve to automate or mechanise their business processes and enhance productivity may apply to IRAS to have their equipment approved for PIC benefits on a case-by-case basis.
For more details, please refer to Acquisition and Leasing of PIC IT and Automation Equipment.
To find out whether your equipment qualifies for PIC, please use our Equipment Search Function.
Training of Employees
This refers to the costs incurred to provide training to employees for the purposes of the trade and business, and can include both training conducted by the business' personnel or by external trainers.
For YA 2012 to YA 2018, qualifying training expenditure incurred on in-house training not accredited by the Workforce Development Agency (WDA) or approved/certified by the Institute of Technical Education (ITE) will also qualify for PIC, subject to a cap of $10,000 for each YA.
There is no need to obtain prior approval from IRAS for training expenditure to qualify for PIC.
For more details, please refer to Training of Employees.
Acquisition and Licensing of Intellectual Property Rights (IPR)
This refers to costs incurred in:
- Acquiring IPRs for use in a trade or business, as set out in Section 19B of the Income Tax Act; and
- IPR licensing from YA 2013
There is no need to obtain prior approval from IRAS for costs incurred on the acquisition or leasing of IPR to qualify for PIC.
Eligibility for PIC benefits
- Acquisition of IPRs
Only companies and partnership are allowed to claim PIC benefits on costs incurred to acquire IPRs, as provided in Section 19B. The transferee, i.e. the acquirer of the IPR, must acquire the legal and economic ownership of the IPR from the transferor, i.e. the seller of the IPR. Legal ownership means the legal assignment of the IPR is granted to the transferee. Economic ownership means the future economic benefits attributable to the IPR will accrue to the transferee.
- Licensing of IPRs
All businesses are allowed to claim PIC benefits in costs incurred to license IPRs for use in their trade or business, subject to the other PIC conditions.
Scope of IPRs under PIC
The scope of acquiring IPRs under PIC covers:
- Registered designs
- Geographical indications
- Lay-out designs of integrated circuit
- Trade secrets or information that has commercial value; and
- Plant varieties.
The scope of IPR licensing under PIC covers all of the above, except (c) trademarks
Exclusions from the scope of IPR acquisition/ licensing
In line with the policy intent of Section 19B, in the definition of IPR, the expressions “trade secret” and “information that has commercial value”, and any work or subject matter to which the expression “copyright” relates, exclude the following:
- information of customers of a trade or business, such as a list of those customers and requirements of those customers, gathered in the course of carrying on that trade or business;
- information on work processes (such as standard operating procedures), other than industrial information, or technique, that is likely to assist in the manufacture or processing of goods or materials;
- compilation of any information as described in paragraph (1) or (2); and
The following are excluded from the scope of IPRs for the purpose of PIC:
- IPRs that are granted waiver of the legal ownership condition by EDB; and
- IPRs pertaining to films, television programmes, digital animations or games or other media and digital entertainment contents approved by EDB for writing-down allowances over two years.
Examples of qualifying expenditure
Some examples of qualifying expenditure are:
- Payment to buy a patented technology for use in manufacturing process
- Price paid for copyright
Minimum ownership period
Companies and partnerships must own the IPRs for a minimum period of five years, failing which claw-back provisions may apply. For more information, please refer to Minimum ownership of PIC IT and Automation Equipment and Intellectual Property Rights.
Registration of Patents, Trademarks, Designs and Plant Varieties
This refers to costs incurred to register patents, trademarks, designs and plant varieties.
There is no need to obtain prior approval from IRAS such costs to qualify for PIC.
Eligibility for PIC Benefits
You can claim PIC benefits on costs incurred to register patents, trademarks, designs and plant varieties (qualifying IPRs) on the condition that you acquire the legal and economic ownership of the qualifying IPRs.
Registration cost is broadly divided into two categories:
Official fees refers to payments made to the Registry of Patents, Registry of Trade Marks, Registry of Designs or the Registry of Plant Varieties in Singapore or elsewhere for:
- Filing of an application for a patent, registration of a trademark or design, or for grant of the protection of a plant variety;
- Search and examination report on the application for a patent;
- Examination report on the application for grant of protection for a plant variety; or
- Grant of a patent.
For example, fees paid to the Intellectual Property Office of Singapore (IPOS) to register trademark are considered as qualifying expenditure.
Professional fees must be incurred in relation to the registration of the qualifying IPRs and covers payments made to any person acting as an agent for:
- Applying for any patent, registration of a trade mark or design, or for the grant of protection of a plant variety, in Singapore or elsewhere;
- Preparing specifications or other documents for the purpose of the Patents Act (Cap. 221), the Trade Marks Act (Cap. 332), the Registered Design Act (Cap. 266), the Plant varieties Protection Act (Cap. 232A) or the intellectual property law of any other country in respect of patents, trademarks, designs or plant varieties;
- Giving advice on the validity or infringement of any patent, trade mark, design or plant variety.
Examples of allowable costs include prior art searches and translation costs where overseas intellectual property offices require documentation or specifications to be submitted in their native languages.
For more information, please refer to the Intellectual Property Office of Singapore (IPOS) website.
Minimum Ownership Period
Businesses must own the IPRs registered for a minimum period of one year, failing which claw-back provisions may apply. For more information, please refer to Minimum ownership of PIC IT and Automation Equipment and Intellectual Property Rights
Research and Development (R&D) Activities
This refers to costs incurred on staff costs and consumables for Qualifying R&D Activities carried out in Singapore or overseas. There is no need to obtain prior approval from IRAS for expenditure incurred on R&D activities to qualify for PIC.
Eligibility for PIC Benefits
Only taxpayers who are beneficiaries of the R&D activities can claim PIC benefits on R&D expenditure.
Definition of R&D
Under Section 2 of the Income Tax Act, R&D means any systematic, investigative and experimental study that involves novelty or technical risk carried out in the field of science or technology with the object of acquiring new knowledge or using the results of the study for the production or improvement of materials, devices, products, produce, or processes but does not include:
- Quality control or routine testing of materials, devices or products;
- Research in the social sciences or the humanities;
- Routine data collection;
- Efficiency surveys or management studies;
- Market research or sales promotion;
- Routine modifications or changes to materials, devices, products, processes or production methods;
Cosmetic modifications or stylistic changes to materials, devices, products, processes or production methods; or
- *Development of computer software that is not intended to be sold, rented, leased, licensed or hired to two or more persons who are not related parties to each other and to the person who develops the software or on whose behalf the development of the software is undertaken.
* Deleted with effect from YA 2012 and subsequent YAs.
The qualifying R&D expenditure for the purpose of claiming PIC benefits are:
- R&D expenditure incurred on R&D projects carried out in Singapore or overseas; and
- R&D expenditure related to the taxpayer's Singapore trade or business.
Qualifying expenditure refers to staff costs, consumables and any such expenditure prescribed by the Minister. The R&D expenditure also has to be computed net of subsidy and grant received from the Government or statutory board.
Some examples of qualifying expenditure are:
- Salaries for in-house R&D personnel
- Up to 60% of fees* paid to an R&D institute for creating a novel product
- Costs incurred in an R&D cost sharing arrangement from YA 2012
* Where more than 60% of the fees actually relate to such qualifying R&D expenditure, the business may claim base deduction and additional deduction based on such actual qualifying R&D expenditure incurred if it is able to substantiate the claim.
Design Projects Approved by DesignSingapore Council
This refers to costs incurred to create new products or industrial designs where the activities are primarily in Singapore. Businesses have to obtain prior approval from the DesignSingapore Council (“DSg”) for their design projects.
Eligibility for PIC benefits
You can claim for PIC benefits if you are the beneficiary of the design activities primarily carried out in Singapore. You should not be in the trade of providing design services, and the design project must have been approved by DSg. To claim PIC benefits, the design or trademark must be registered in the company's / partnership's / sole-proprietorship's capacity.
The qualifying design costs are:
- For in-house design projects - 100% of staff costs incurred on qualified design professional carrying out the approved design activities. A qualified design professional is one with tertiary academic qualification (at least a diploma) in industrial or product design approved by DSg; or
- For out-sourced design activities - 60% of the total payments made to the approved design service provider will be deemed as staff costs of qualified designers and allowed for enhanced deduction.
Where more than 60% of such payments are made up of staff costs of qualified designers, enhanced deduction based on the actual percentage of staff costs incurred is allowed. Copies of invoices issued by the design service provider which identify the amount relating to staff costs of qualified designers must be retained for verification purposes.
The qualifying design costs are computed net of any grant or subsidy received from the government or statutory board.
For more information, please refer to the DesignSingapore Council website or contact them at:
Helpline: +65 6333 3737