Government to enhance Productivity & Innovation Credit Scheme

By Millet Enriquez, dated 17th February 2012

SINGAPORE: In helping companies deal with the labour shortage, the government said it will enhance the Productivity and Innovation Credit Scheme (PIC).

It will also set aside S$2 billion to the National Productivity Fund (NPF) to provide more targeted support for industries to restructure.

Taking into account feedback from business groups, the government said it will increase the cash payout to companies from 30 per cent to 60 per cent for their PIC expenditures.

This means that a company which invested S$10,000 in staff training will be eligible for a S$6,000 cash payout, compared to S$3,000 under the existing PIC scheme.

The government said the scheme is most useful to companies with limited taxable income.

In addition, the companies can also get their cash payout faster.

From July 1, companies can claim and obtain their PIC cash payouts quarterly instead of waiting for the financial year to end.

So far, the PIC scheme has helped companies enjoy tax savings totalling S$650 million since being implemented last year.

About one in three small companies with a turnover of S$10 million or less have used the PIC.

The scheme covers productivity-related expenses such as training or investment in equipment.

Companies that have used the scheme can see their taxes come down by 40 per cent on average.

“What was lacking in the previous year was that most of the scheme (PIC) was directed towards SMEs, (but) unfortunately the SMEs did not get the benefits. The MNCs and the big business operators ended up enjoying most of the benefits,” said Abhijit Ghosh, tax partner, PwC Services LLP (Singapore).

“So it’s all a matter of education, the right focus and ensuring that you incur the expenses on the right buckets where the government is focusing and enhance your productivity.”

Article reference source from Channel News Asia

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