Frequently Asked Questions

Under the PIC Scheme, businesses can enjoy 400% tax deductions/allowances and/or 60% cash payout for investments made in any of the Six Qualifying Activities from the Years of Assessment (YAs) 2013 to 2018.

From YAs 2013 to 2015, businesses can also enjoy a PIC Bonus. This is a dollar-for-dollar matching cash bonus capped at $15,000, given on top of the existing tax deduction/allowance and/or cash payout.  As announced in Budget 2015, PIC Bonus will expire in YA 2015.

 

At a Glance

  • Eligibility
  • Six Qualifying Activities
  • PIC Benefits (tax deductions/ allowances and PIC+, cash payout, PIC Bonus)
  • Qualifying Conditions
  • Claiming PIC Benefits
  • Checking Status of PIC Cash Payout Applications

 

Things to be aware of

  • Measures to Curb PIC Abuse and Abusive Scenarios
  • Signs of Unacceptable and Suspicious PIC Arrangements
  • Common Mistakes to Avoid when Claiming PIC
  • Voluntarily Disclose an Error to Qualify for Reduced Penalties
  • Engaging PIC Consultants to File Claims

 

Getting Help from IRAS

  • Register for PIC Seminars
  • Contact us

 

Information for Vendors and PIC Consultants

  • Find out more about what Vendors and PIC Consultants should know

 

Eligibility

All businesses, including sole proprietorships, partnerships, companies, registered branches and subsidiaries of a foreign parent or holding company, are eligible for PIC.

Six Qualifying Activities

PIC 2015_6 Qualifying Activities

 

Examples of IT and Automation Equipment that Qualify for PIC

Businesses may enjoy PIC benefits on the cost incurred to acquire or lease equipment that are in the PIC IT and Automation Equipment List.  For equipment that are not in the PIC IT and Automation Equipment List but which automate or mechanise the business processes and enhance productivity, you may apply to IRAS for approval on a case-by-case basis.

Use this search function to find out whether your equipment qualifies for PIC benefits.

PIC Benefits

Tax Deductions/ Allowances

400% tax deductions/ allowances on up to $400,000 of spending per year in each of the six qualifying activities.

 

PIC+ Scheme
From YAs 2015 to 2018, qualifying businesses can enjoy 400% tax deductions/allowances on up to $600,000.

For more details, please refer to How PIC Benefits You.

Cash Payout

Option to convert up to $100,000 of total spending in all six activities for each YA into a non-taxable cash payout, in lieu of the tax deduction/allowance.
For YAs 2013 to 2018, the cash payout rate is 60% of qualifying expenditure incurred.

For more details, please refer to How PIC Benefits You.

PIC Bonus

A dollar-for-dollar matching cash bonus, subject to an overall cap of $15,000 over YAs 2013 to 2015 combined.

Qualifying Conditions

Tax Deductions/ Allowances

Carries on active business operations in Singapore.
Incurred qualifying expenditure and are entitled to PIC during the basis period of qualifying YA.

Cash Payout

Carries on active business operations in Singapore.
Incurred qualifying expenditure and are entitled to PIC during the basis period of qualifying YA.
Meets the three-local-employee condition.
Minimum qualifying expenditure for each cash payout option application is $400.

PIC Bonus

Made a claim for 400% tax deductions/ allowances and/or cash payout.
Carries on active business operations in Singapore.
Meets the three-local-employee condition.
Incurred at least $5,000 in PIC-qualifying expenditure during the basis period for the YA.

Claiming PIC Benefits

Tax Deductions/ Allowances

Other than design projects, no prior approval from IRAS is required. Claim enhanced deductions/ allowances in your Income Tax Return for the relevant YA by the filing due date.

 

Cash Payout

 

Submit PIC Cash Payout Application Form online anytime after end of relevant financial quarter (for YAs 2013 to 2018) but before the filing due date of Income Tax Return for the relevant YA. 


PIC Bonus

No separate application needed. IRAS will compute the PIC Bonus based on PIC qualifying expenditure declared in your Income Tax Return or PIC Cash Payout Application Form, subject to an overall cap of $15,000 for all three YAs (YAs 2013 to 2015).

Checking Status of PIC Cash Payout Applications

Businesses are encouraged to check your application status via the e-Service - this is the quickest and most convenient way, as you will be able to access the e-Service anytime. IRAS strives to distribute the cash payout within three months of receiving your complete application. In most cases, IRAS processes the applications within six weeks.

Things to Be Aware Of

Measures to Curb PIC Abuse

IRAS takes a serious view of any non-compliance or abuse of the scheme. 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 face imprisonment of up to five years. This includes any person who wilfully assists another person to obtain a cash payout or PIC bonus which he is not entitled to.

Anti-Abuse Measures

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:

  1. Deny PIC benefits arising from abusive arrangements as follows:

Description of Abusive Arrangement

Amount of PIC Benefits Disallowed

It consists of or uses artificial, contrived or fraudulent means.

That part of PIC benefits arising from the use of the artificial, contrived or fraudulent means

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

    2.      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 need to pay a fine of up to $10,000 and/or face imprisonment of up to three years.

A promoter of a PIC arrangement is a person who:

  1. Designs, facilitates, organises or manages that arrangement; or
  2. Publishes, disseminates or communicates any information for the purpose of inducing or encouraging any other person to enter into the arrangement.

Examples of Abusive PIC Arrangements

IRAS adopts a commonsensical approach towards interpreting the law on the anti-abuse measures. When ascertaining whether an arrangement is abusive and/ or an offence has been committed, we will consider all relevant facts and circumstances and conduct in-depth investigations where necessary. Please refer to the following scenarios which, in our view, contain abusive features:

An individual who is not carrying out an active business takes the following action(s) to make PIC cash payout claims with IRAS:

  1. Incorporate sole-proprietorships or companies with ACRA;
  2. Make minimum/low CPF contributions for persons who are not employees, such as parents, siblings, friends or other persons. This is done so that they appear to be employees of the claimants for PIC claims when in fact no work was done or that the works which were purportedly done were not for bona fide commercial reason; and/or
  3. Sign agreements with related/friendly parties to purchase items or services such as mobile apps or websites at inflated prices.

The claims will be disallowed as the PIC arrangements are abusive. The actions are contrived, overvalued and put in place so as to make PIC cash payout claims without bona fide commercial reason. IRAS will consider whether these claims should be subject to criminal investigations.

In some abusive PIC arrangements, a group of individual sets up multiple businesses and sells PIC-qualifying products or services among them typically at inflated prices. There is no bona fide commercial reason for such sales aside from obtaining a PIC cash payout.
Such an arrangement may include the following:

  1. Two individuals arrange to set up a company each, Company A and Company B. Both companies provide identical services (e.g. training).
  2. Company A engages Company B to conduct training to Company A's employees for $15,000; while Company B also engages Company A to conduct similar training to their employees for $15,000.
  3. The cost for delivering both sets of training is negligible since the companies could have provided the training services to their own employees.

Companies A and B both seek to benefit from PIC cash payouts and bonus of $24,000 each. The claims will be disallowed as the PIC arrangements are abusive. Aside from deriving PIC cash payouts, there is no bona fide commercial reason for the arrangements. IRAS will consider whether these claims should be subject to criminal investigations.

An individual sets up many companies. These companies derive minimal revenues, but would each incur PIC qualifying expenditure that is disproportionate to their revenue (e.g. ten times the revenue) and claim PIC cash payouts and bonus. For example:

  1. A director sets up Companies X, Y, and Z to sell baby products through mail order - Company X sells clothes, Company Y sells toys and Company Z sells diapers.
  2. All companies derived $1,000 in sales in the relevant period.
  3. All companies engaged an e-commerce vendor to develop a website and inventory management system for each of the companies. Each company incurred $15,000 on the software.
  4. All companies would claim PIC cash payouts and bonus of $24,000 each. The net receipt of the companies would be $9,000 each after subtracting $15,000 paid to the software vendor.
  5. In participating in this arrangement, the director of Companies X, Y, and Z would benefit $27,000 in total.

The claims will be disallowed as the PIC arrangements are abusive. Apart from the purpose of obtaining PIC cash payouts, there is no bona fide commercial reason to incur such disproportionate expenditure and to duplicate three sets of website and inventory management software for this scale of business activity. IRAS will also consider whether these claims should be subject to criminal investigations.

For more examples of abusive PIC arrangements, please refer to Annex H of the e-Tax Guide " Productivity and Innovation Credit (736KB)".

If you wish to report potential abuse of the PIC scheme, you can email IRAS at ifd@iras.gov.sg.

Alternatively, you can write in to:

Inland Revenue Authority of Sinapore
Investigation & Forensics Division
55 Newton Road
Revenue House
Singapore 307987

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 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 may need to pay a penalty and/or face imprisonment as you are ultimately responsible for the accuracy of your PIC application.
Please refer to the IRAS website or contact IRAS (details listed below) should you wish to:

  1. Get assistance or clarification on PIC
  2. Verify if the advice given to you by vendors, salespersons or consultants is accurate

When submitting PIC cash payout claims, both businesses and PIC consultants should take note of the correct procedure and common mistakes to avoid. This will minimise unnecessary delays in the processing of the PIC application and help businesses to keep a clean record with IRAS.

For more details, please refer to Common Mistakes Made by Companies when Filing PIC claims.

Voluntarily Disclose an Error to Qualify for Reduced Penalties

IRAS' Voluntary Disclosure Programme  aims to encourage taxpayers that have made error in their tax returns to voluntarily come forward to correct their errors and set their tax matters right, in exchange for reduced penalties.

If you have made any errors in claims for PIC cash payout and/ or enhanced tax deductions/ allowances on any of the six qualifying activities of the PIC scheme, please disclose the errors to IRAS by submitting the PIC Disclosure of Error Form (166KB).

Engaging PIC Consultants to File Claims

Most businesses file their PIC cash payout claims themselves. If you need assistance from PIC consultants when submitting your PIC cash payout claims, please consider the background of these consultants and engage only those who are competent to provide factual advice. These consultants typically charge a fee (flat fee and/or a percentage of the PIC cash payout received) for their services.

IRAS has not appointed or endorsed any private consultant on PIC matters.
Regardless of whether businesses file the PIC cash payout claims on their own or with the help of consultants, businesses are ultimately responsible for the accuracy of the claims.

For more details, please refer to Engaging Consultants to File PIC Claims.

Getting Help from IRAS

  1. Register for PIC Seminars
    IRAS holds regular PIC seminars to help businesses understand how they may benefit from the PIC scheme. The specially designed seminars include the following topics:
    1. Benefits of PIC Scheme
    2. Six Qualifying Activities under the Scheme
    3. Computation of Tax Deduction and Cash Payout Option
    4. PIC+ Scheme for Small and Medium Enterprises (SMEs)
    5. Application Details
    For more details, please refer to the Seminars and Events page.
  2. Contact Us
    Please contact us for assistance or clarification on PIC.
    1. Email address: picredit@iras.gov.sg
    2. Contact IRAS Helplines

Type of Entity

Helplines

SMS "Return My Call" Service
(Only for Singapore mobile numbers)

Companies (e.g. private limited company)

1800 356 8622

SMS "PIC-CT (followed by your name)" (Example "PIC-CT John Tan") to +65 9107 6902. Our officers will contact you by the next working day.

Self-employed (e.g. sole proprietorship)/ Partnership

+65 6351 3534

SMS "PIC-SE (followed by your name)" (Example "PIC-SE John Tan") to +65 9107 6902. Our officers will contact you by the next working day.

Information for Vendors and PIC Consultants

Vendors and PIC Consultants are expected to be familiar with the rules and procedures relating to the PIC scheme, if they intend to help their clients claim PIC. Find out more about what Vendors and PIC Consultants should know about PIC.  

  • Do investment holding companies qualify for PIC?

    Investment holding companies do not qualify for PIC as they do not carry on a trade or business for tax purposes.  These companies own investments such as properties and shares for long-term investment and derive investment income such as dividend, interest or rental. 

     

  • Do service companies qualify for PIC?

    A service company renders services to/on behalf of its related companies.


    Service companies that derive arm's length fees will qualify for PIC. These companies need to prepare their tax computations under the normal tax rules. If a service company elects to use the cost plus mark-up basis of assessment, the company will not qualify for PIC.  This is because an acceptance of mark-up as the chargeable income of the company is net of all available deductions and allowances (including PIC).

  • Do bodies of persons i.e. clubs, trade associations, management corporations, town councils and co-operatives qualify for PIC?

    The PIC cash payout and PIC bonus are not available to bodies of persons. It is available only to companies, partnerships and sole-proprietorships with at least three local employees, as the intention is to focus our help on business enterprises, especially SMEs with cash-flow needs for their expenditures on innovation and productivity initiatives.

    As for PIC enhanced deductions, only bodies of persons deemed to be carrying on business (for tax purposes) can avail themselves of the PIC enhanced deductions/ allowances. Do note that clubs, trade associations and management corporations are normally not considered as conducting a commercial or profit-making trade or business.

    The following paragraphs spell out the eligibility of the various Bodies of Persons in making claims for PIC deductions/ allowances.

    (a)     Clubs and Management Corporations

    % of receipts from membersDeemed carrying on business?Can claim PIC deductions/ allowances?

    ≤ 50%

    Yes

    Yes

    >50%

    No

    No

    (b)     Trade associations

    % of receipts from Singapore members*Deemed carrying on business?Can claim PIC deductions/ allowances?

    ≤ 50%

    No

    No

    >50%

    Yes

    Yes

    * Receipts refer to entrance fees and subscription from Singapore members who can claim deductions in their tax returns.

    (c)     Town councils are deemed not to be carrying on a trade or business . As such, they do not qualify for the enhanced tax deductions under PIC.

    (d)     Co-operatives registered under the Co-operativ e Societies Act are exempt from tax under Section 13(1)(f) of the Income Tax Act. As such, they do not qualify for the enhanced tax deductions under PIC. 

  • If I am a newly set up company, can I enjoy both PIC and the tax exemption scheme for new start-up companies?

    Yes, if your company meets the conditions under PIC and "Tax exemption scheme for new start-up companies" respectively.
  • Our business income is taxable at the prevailing rate and concessionary rate. How will enhanced deductions be allowed on qualifying expenditure in relation to income streams taxed at different tax rates? 

    For a business whose income is taxable at the prevailing rate ("normal income") as well as at one or more concessionary rate(s) ("concessionary income"), enhanced deductions are first granted on qualifying expenditure incurred in relation to the normal income.

    If the applicable expenditure cap is not exhausted, enhanced deductions are then granted on qualifying expenditure incurred in relation to the concessionary income that is subject to tax at the highest concessionary rate first followed by the next highest rate and so on, until the expenditure cap is reached.

  • How will enhanced deductions be allowed on common expenditure and common assets if our business income is taxable at the prevailing rate and concessionary rate?

    In general, common expenditure incurred for both the normal and concessionary trade is allocated to income derived from each trade for tax purposes. 

    Common expenditure

    When computing the PIC benefits, enhanced deductions (excluding enhanced deductions arising from IPR registration) are first granted on qualifying common expenditure allocated to the normal income.

    If the applicable expenditure cap is not exhausted, enhanced deductions are then granted on qualifying common expenditure allocated to the concessionary income that is subject to tax at the highest concessionary rate first followed by the next highest rate and so on, until the expenditure cap is reached.

    Where the IPR registration cost is a common expenditure, the base and enhanced deductions are determined first before allocating the deductions to each stream of income.

    Common assets

    Enhanced allowances on common assets i.e. qualifying equipment and IPRs are granted on the full cost of each asset, up to the expenditure cap. The enhanced allowances are then computed for each qualifying common asset before the 100% base and 300% enhanced allowances are allocated to each stream of income.

  • How long am I required to keep the supporting documents for my claims under PIC?

    The existing record keeping requirements for businesses apply. You are required to maintain all the supporting documents such as invoices for a period of five years.

    For example, if you purchase PIC Automation Equipment during your financial year ending in year 2013 (i.e. the basis period for YA 2014) and make a claim for cash payout for YA 2014, you are required to keep the relevant documents for the purchase till 31 Dec 2018.

  • What should I do if I have overlooked the PIC enhanced tax allowances/deductions in the Income Tax Return?

    You can email or write to us within 30 days from the date of your Notice of Assessment/Allocation of Profit/Loss to Partners, giving us your full name, tax reference number and details of amendment as stated below.

    For sole-proprietors/partnerships

    Please provide us with the revised four-line statement by including the amount of qualifying PIC enhanced allowances/deductions under the "Allowable Business Expenses" of the 4-line statement.

    In addition, please complete and submit the PIC Enhanced Allowances/Deductions Declaration Form for Sole-proprietors and Partnerships (www.iras.gov.sg > Home > Quick Links > Forms > Individuals).

    For businesses with revenue of $500,000 or more, you need to complete the PIC declaration form and submit this together with a revised tax computation.

    For companies

    Please complete the Form for Filing Revised Income Tax Computation(s) available at (www.iras.gov.sg > Home > Quick Links > Forms > Businesses > Corporate Tax Forms) and submit a revised tax computation incorporating the computation of PIC claims.

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