Singapore implements new tax incentives for design innovation

Tax incentive encourages companies to adopt design and design thinking to improve competitiveness.

A new tax incentive scheme to encourage companies to adopt design innovation, entitled the ‘Productivity and Innovation Credit for Investments in Design’ (PIC for Design), has been implemented on 1 June 2010. The “PIC for Design” is part of the ‘Productivity and Innovation Credit’ announced in the Singapore Budget 2010 which provides significant tax deductions for investments in a broad range of activities along the innovation value chain, including Design, according to a Ministry of Information, Communications, and the Arts report.

The scheme, which will be administered by the DesignSingapore Council (Dsg), aims to encourage pervasive and continuous design innovation in companies in Singapore. The “PIC for Design” will be available for five years, from the Years of Assessment (YA) 2011 to 2015. Companies can enjoy a deduction of up to 250% of their total income (capped at $300,000 for each YA) if they incur the qualifying expenditure on approved industrial and product design projects from YA 2011 to YA 2015. For the first two YA, a combined cap of $600,000 is set to help small and medium enterprises benefit from the Credit scheme without them having to rush to complete the implementation of their investments. Under the Scheme, businesses will also be able to convert their credit deductions into a cash grant payout.

To qualify for the Scheme, the design project must be related to industrial and product design activities and result in the final design of a physical product. The design project must also result in the creation of new intellectual property registered with the Intellectual Property Office of Singapore (IPOS) in the forms of registered design or patented invention. In addition, the design project must follow through an entire design process and must be conducted and completed in Singapore within two years.

Mr Jeffrey Ho, Director of Dsg, said “The DesignSingapore Council, through the “PIC for Design” tax incentive scheme, hopes to encourage businesses to leverage on design and design thinking in their business strategy to enhance their global competitiveness.”