Productivity and innovation boosted with tax deferral

Companies that tap the Productivity and Innovation Credit scheme can defer paying their taxes for a year.

The objective is to facilitate cash flow for these companies.

This was announced by Finance Minister Mr. Tharman Shanmugaratnam announced in his Budget 2011 speech.

For up to S$100,000 of qualifying PIC expenditures in the current year, small and medium sized enterprises can defer the same quantum of tax to the next year.

This 1-year tax deferral will apply to expenditures for the years of assessment 2012 to 2015.

The PIC covers expenditures in 6 areas, namely research and development, design, acquisition of intellectual property, registration of intellectual property, purchase of automation equipment, and training.

The announcement has been welcomed by some industry players, according to media reports. But others note that hurdles to the scheme’s take-up – such as significant restrictions on costs that can be claimed – remain.