Another tax specialist has suggested that the Productivity and Innovation Credit (PIC) scheme should be extended and refined in the upcoming Budget.

In its wishlist for this year's Budget, Ernst & Young called for the scheme - set to expire when the Government's 2014 financial year ends in March 2015 - to be extended for a further five years.

"Efforts to encourage productivity and innovation will be short-lived if the PIC is phased out, especially when investments in productivity are just beginning to take off," said Ms Tan Bin Eng, Business Incentives Advisory partner at Ernst & Young.

The PIC, which has been enhanced each year since it was introduced in 2010, allows businesses to deduct from their taxable income 400 per cent of the first $400,000 spent on productivity-related investments.

Besides an extension of the scheme, there is also room for a more generous payout, said the audit firm.

The PIC allows eligible companies to convert up to $100,000 of qualifying PIC expenditure into a cash payout.

Increasing the cash payout from $100,000 to $400,000 for companies with less than $100 million in turnover will ensure that the benefits reach a more targeted group, said Ms Tan.

Ernst & Young's proposal to extend the scheme comes on top of similar suggestions by other accounting firms including Deloitte Singapore and PricewaterhouseCoopers.