Corporate Income Tax Rebate for Years of Assessment 2013 to 2015

In an effort to help companies cope with rising business costs, the Minister for Finance announced in Budget 2013 that for the Years of Assessment (YA) 2013, 2014 and 2015, companies will receive a 30% Corporate Income Tax (CIT) Rebate that is subject to a cap of $30,000 per year of assessment.

This CIT rebate will be given to all companies, including Registered Business Trusts, companies that are not tax resident in Singapore and companies that receive income taxed at a concessionary tax rate.  The rebate will not apply to the amount of income derived by a non-resident company that is subject to final withholding tax.

Productivity and Innovation Credit (PIC)

Tax benefits are available from Years of Assessment (YAs) 2011 to 2015 under the Productivity and Innovation Credit (PIC) scheme to small and medium size enterprises. Under this scheme, businesses can continue to enjoy 400% tax deductions/allowances and/or 60% cash payout for investment in innovation and productivity improvements in any of the six qualifying activities:

1. Acquisition and leasing of PIC Information Technology (IT) and Automation Equipment;
2. Training of employees;
3. Acquisition and In-licensing of Intellectual Property Rights;
4. Registration of patents, trademarks, designs and plant varieties;
5. Research and development activities;
6. Design projects approved by Design Singapore Council.

For their design projects, businesses have to obtain prior approval from the Design Singapore Council. Approval is not required to claim the tax benefits under PIC for the other five activities.

PIC Bonus

From YAs 2013 to 2015, businesses may also enjoy a PIC Bonus, which is a dollar-for-dollar matching cash bonus given on top of the existing 400% tax deductions/allowances and/or 60% cash payout, subject to an overall cap of $15,000 for all 3 YAs combined. To enjoy the PIC Bonus, businesses must have made a claim for the 400% tax deductions/allowances and/or the PIC cash payout. The PIC Bonus is taxable.

The objective of the PIC Bonus is to help businesses defray rising operating costs such as wages and rentals and encourages businesses to undertake improvements in productivity and innovation. The PIC bonus is determined by the amount of expenditure businesses incur on PIC-qualifying activities.
Businesses eligible for the PIC Bonus are sole-proprietorships, partnerships and companies that have:

• incurred at least $5,000 in PIC-qualifying expenditure (this refers to the amount net of grant or subsidy by the Government or any statutory board) during the basis period for the YA in which a PIC Bonus is claimed;
• active business operations in Singapore; and
• at least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions), excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company.
• incurred at least $5,000 in PIC-qualifying expenditure (this refers to the amount net of grant or subsidy by the Government or any statutory board) during the basis period for the YA in which a PIC Bonus is claimed;