Requirements and Extension of Productivity and Innovation Credit Scheme
11 Nov 2013Date: 11 November 2013
Parliamentary Question by Er Dr Lee Bee Wah:
To ask the Deputy Prime Minister and Minister for Finance whether the Ministry will consider (i) waiving the requirement of having at least three local employees to qualify for the Productivity and Innovation Credit (PIC) Bonus; and (ii) extending the PIC Scheme beyond 2015.
Reply by DPM and Finance Minister Tharman Shanmugaratnam:
The Productivity and Innovation Credit (PIC) Bonus, announced in Budget 2013 as part of the Three-Year Transition Support Package, rides on the PIC scheme to further encourage businesses to invest in productivity and innovation and defray rising operating costs for businesses.
There is no requirement for businesses to have a minimum number of employees to claim the 400% PIC tax deductions. It is only for the PIC Bonus and cash payout that businesses must have at least three local employees to qualify. The important point here is that these are both cash benefits, not tax deductions. Given the risk of abuse for a broad-based cash scheme, the condition of at least three local employees is necessary. As a result of this condition, the risk of abuse is significantly reduced and we can therefore incorporate features, such as more timely and regular payouts, to benefit genuine businesses.
Businesses with fewer than three local employees can still benefit from the PIC tax deduction, and other grant schemes such as SPRING’s Innovation and Capability Voucher (ICV) Scheme and e2i’s Inclusive Growth Programme (IGP).
MOF is currently reviewing the PIC scheme. We will take into account the utilization rate, effectiveness and feedback from businesses when assessing whether or not to extend the scheme beyond 2015.