MORE micro-enterprises are taking up a tax rebate scheme aimed at encouraging productivity improvements.

Among companies with revenues of less than $1 million per year, about a quarter claimed tax deductions under the Productivity and Innovation Credit (PIC) last year, up from one in five the previous year, said Senior Minister of State for Finance and Transport Josephine Teo.

She added that the Inland Revenue Authority of Singapore (Iras) - which administers the scheme - will not hesitate to take action against fraudulent PIC claims.

Mrs Teo was responding to questions from Members of Parliament about the effectiveness of government schemes aimed at raising productivity.

The PIC scheme, introduced in 2010, gives tax deductions or cash payouts to firms if they take steps to boost productivity. This includes automation and training.