Update on the Productivity and Innovation Credit Scheme

Mr Ang Wei Neng asked the Deputy Prime Minister and Minister for Finance if he will provide an update of the Productivity and Innovation Credit (PIC) scheme to help the SMEs, in particular, the number and percentage of small companies that have claimed PIC since 2011 with annual turnover of (i) less than $1 million; (ii) between $1 million and $5 million; and (iii) between $5 million and $10 million.

Based on tax returns filed to date2 for Year of Assessment 2012, about 42,000 companies or 37% of active companies have claimed PIC, up from 32% in YA2011. Among active companies with turnover of $10 million or less, about 34,000 companies or 35% have claimed PIC, compared to about 28,000 or 30% of such companies in YA2011.

However, these figures understate the reach of the PIC scheme amongst companies with employees. The enhanced tax deduction under PIC is available to all companies, irrespective of whether they have employees. Nonetheless, PIC is especially relevant for companies with employees, who can take advantage of the scheme to invest in manpower-saving or other productivity enhancements.

Among active companies with at least one employee that have filed tax returns, about 34,000 companies or 57% have claimed PIC. The take-up rate was also high for such companies with a turnover of $10 million or less, at 52%.

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The breakdown of the PIC take-up rate amongst active companies that have filed tax returns is as follows: