SINGAPORE - The Government announced that the Productivity and Innovation Credit (PIC) Bonus scheme will not be extended after this year as it said the transitional measure has been successful in spreading the culture of productivity amongst small and medium enterprises (SMEs)
Instead, the Government will introduce additional measures to support innovation and internationalisation, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in his Budget Statement on Monday.
Mr Tharman last year extended the main PIC scheme by three years to 2018 and introduced a higher level of support, the PIC+ scheme, to benefit SMEs undertaking more significant investments in productivity.
The PIC Bonus was introduced to encourage businesses to take advantage of the main PIC scheme, launched in 2010, which offers substantial enhanced tax deductions or cash payouts on qualifying activities.
The PIC Bonus scheme gave businesses a dollar-for-dollar matching cash bonus for year of assesment 2013 to 2015, subject to an overall cap of $15,000 for all 3 YAs combined.
This was given on top of the existing 400 per cent tax deductions/allowances and/or 60 per cent cash payout under the PIC scheme.
The PIC Bonus, Wage Credit Scheme (WCS) and Corporate Income Tax (CIT) Rebate are the three legs of the Government's Transition Support Package (TSP),an important source of support to businesses since it was launched in 2013, but due to expire this year.
The TSP has given out $7.5 billion over three years, significantly higher than our original estimate of $5.3 billion, Mr Tharman said.
"We recognise that firms may need more time to adjust to rising costs as they restructure," said Mr Tharman. "I will thus phase the transitional support out gradually by extending the WCS and CIT Rebate for two additional years, while letting the PIC Bonus expire.