Extending PIC scheme part of KPMG's wishlist for Singapore Budget 2017


Extending PIC scheme part of KPMG's wishlist for Singapore Budget 2017
  1. Extending PIC scheme part of KPMG's wishlist for Singapore Budget 2017
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    This will help to encourage productivity and innovation during the period of downturn, KPMG said, as it released its recommendations for the coming…
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SINGAPORE: Extend the Productivity and Innovation Credit (PIC) scheme, boost measures to help businesses digitise as well as introduce a tax regime to attract intellectual property to Singapore - these were among the recommendations made by KPMG on Thursday (Jan 12) for Singapore's 2017 Budget.

A key recommendation is for the Government to extend the PIC scheme beyond its expiry in the 2018 year of assessment.

This will help to encourage productivity and innovation during the period of downturn, said KPMG. The scheme, which was first introduced in Budget 2010, encourages local companies to invest in productivity by offering them cash and tax deductions for costs like worker training and automation.

The Government could also consider having a more targeted approach in awarding such incentives, suggested KPMG Singapore's head of tax Chiu Wu Hong.

“Be it a similar scheme that is extended for a year or in other forms, certain targeted help - like in research and development or internationalisation or forms of subsidies - should be encouraged,” he said.

The Government had earlier lowered the cash payout rate under the PIC scheme to 40 per cent from 60 per cent. Still, Mr Chiu said the expiry of the PIC scheme could mean that the benefits of R&D tax incentives are significantly lowered.

For instance, for a company that incurs S$100,000 in qualifying R&D expenditure, it could receive up to 68 per cent in benefits, according to a report by KPMG, which added that this will be down to 25.5 per cent after the PIC scheme expires.

The call to extend the scheme is one shared by the president of the Association of Small and Medium Enterprises (ASME) Kurt Wee.

While acknowledging that the PIC scheme had received bad press over cases of abuse, Mr Wee said the success of the scheme has been underestimated: “I think PIC has achieved such a broad level of success in changing the behaviour and getting the ground to move up and understanding what kind of help is available. And they can draw it down themselves and really transform a lot of players on the ground, on at least a basic level of digitisation.

“PIC itself is now a strong brand in Singapore. You talk to any SME, you talk to them about PIC, they understand the mode and the framework of how it’s like.”

DIGITISATION TO IMPROVE INNOVATION

Other suggestions by KPMG to boost innovation and productivity included the digitisation of business and labour, as well as a patent box-type regime to attract intellectual property to Singapore.

The paten…

Tags: #Singapore
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