Social Transformation Budget in PIC Scheme

The over-riding subject of Singapore budget is making a real difference to shared spending. However, it’s about striking the accurate balance amount. 

In this year, budget puts emphasis on transformation; however this time the full impact is planned to be as much communal as economic. Now, the Govt. is also introducing design to raise business innovation and productivity. This is budget that strengthens common Singaporeans with commendable attention on funding to increase collective spending. Some Singaporean organizations are just starting transformation to innovation-base growth and productivity driven growth.   

It’s good to see support events like the innovation PIC scheme extended and enhanced for 3 years until 2018. No doubt, benefit like the PIC Scheme is not a ‘silver bullet’ to drive behavior however it’s important   that they’re available for long term to get traction and support. These efforts are required to become more innovative and productive. 

Furthermore, bid to increase productivity, the Govt. has also announced the PIC scheme which has been planned for medium and small sized companies with large investments for revamping this business. It’s a simple indication that this budget is used for quality of business in terms of deeper abilities and innovations.      

While the extension of development(R/D) and research tax incentive for next10 years to show that Govt. has replied to calls by traders for long term help them with their innovative support and efforts.  

The comprehensive timeframe would profit in business to improve and build up their present services and products. It’s a sign that management appreciates such actions.   

Towards a good society:-

Increased social spending is a feature of past budget because Govt. tries to grow the income gap. This is not an exception with improved and increased subsidies for school going children, raised central funds contributions for employees. A generous USD 8 billion package of healthcare profits has been designed to the honor of 1st generation of Singaporeans who can build the main state. 

There is ‘close link’ to the Govt.’s productivity focused on economic strategies with the increased social spending planned to drive. Because, any new spending initiative gets inquiries about how they’ll be supported. 

However the Govt. have used tax revenue to fund this operating revenue, spending can’t be sufficient to manage this increase in future. The competitors of that area have planned to reduce the corporate tax rate (for instance, Malaysia). It can be detrimental to Singapore‘s competitiveness to raise the tax rate at the costs of fund collection.

In the meantime, increasing individual GST and taxes is also based on political costs the management has to calculate properly. Some can argue that management must, by rule, open all possible innovative methods to handle these issues thus to keep social spending all sustainable while considering other non-tax revenue basis to fund these social program.   

Mechanized to growth  

A hard message is also contained for some industries to measure the high level policies to press-on with policies to change these corporations to increase the productivity.  This evolution can’t have any important impact on SME- with these companies being forced to down-size, change business, all on the name of revitalizing the SME prospect. This message is simple; they’ve no option to rebuild and to adjust the new economic environment. 

Supporting improvement

At the same time, the extension and enhancement of the pic bonus Singapore raises some interesting questions about just how beneficial it has proved to be as a measure to drive innovations. Recent research has also shown that management should improve productivity for effective business in Singapore. But the results are weaker in the innovative area- led growth statistics because taking up of PIC-scheme is shown that less than 3% of PIC-scheme has claims involved into some RD activate.    

It can be relevant to think whether any cause to take up is the un-certain interpretation of RD tax incentive scheme. The query of type of innovation is planned to be incentivized under the pic-scheme.  First of all, it should be very clear about innovation and strategies. It’s also important for both associated taxpayers and tax authorities. 

 

Because of this non alignment, there’s confusion about the policies of encouraging pervasive creativity in Singapore. Especially for SME and other services areas and the methods of tax-incentives are administered. We’re entering into the next section of growing business. It’s suitable that we’ve more clarity about the tax purpose and innovations.   

Finally, when business can’t view that there’s focused application industry for this scheme that is reliable with policies. The incentive will increase with its objective.  This is very critical point; we have to review the procedure of increasing the revenue in Singapore companies. 

Growth of S-M-Es

Moreover, noticeable is that focus on budget is done by challenging resources to SME to address the particular challenges in this industry. The incentive schemes and slew of funding is varied from encouraging the acceptance of I-C-T investment to help rebuilding of construction industries.  

With the improvements to financial schemes and global program this budget will boost your company and it has ability to do trade in global markets as well. It’s important stage, given the economic integration facilitated by ASEAN-Economic community- 2015 plan.  

However, some will argue about this budget but they will be few in number.  Singapore has to face all challenges as well as growth targets.  Singapore Budget must recognize the social and economic improvements required to go hand-in-hand for important long term progress. This is only main and important step which is provided by the executed and effective communications. 

Productivity & Innovation Credit (PIC) Scheme

• USD 400,000 of spending annually/ activity is combined across 2016-2018

• PIC payback is also allowed on training operating cost/individuals

PIC+ Scheme

• Applicable to an entity and SMEs (partnership, sole-proprietorship and company) succeed as an S-M-E when its yearly income is not more than USD 100 million. This industry will also evaluate it. From year 2015-2018
• Max USD 600,000 of spending annually/activity or combined costs of USD 1.2 million/ activity for 2013-2015.
• Similarly 6 qualifying activities like PIC-SCHEME

Mythologies on I.R.A.S PIC Scheme Bonus for your business growth

The PIC bonus helps commerce pay rising operating expenses like rentals and wages which encourages business to undertake developments in innovation and productivity. It’s determined by amount of expenditure business incur on methodologies and PIC Scheme qualifying activities.   Statistics declare that these companies in Singapore have been using government’s grants and subsidies. This is to increase the productivity that is good for every business.   But, Singapore-tax agencies are concerned of claims made by these companies on these methodologies or schemes. 

After assessment of 7 years that took place in 2013-2015, the businesses that can invest under some terms and qualify according to Innovation PIC Scheme and productivity.  The revenue authority in Singapore provides the acceptance of approaches that is based on rules to characterize the different payments of taxes.  These rules include software payment and instructions using the digitized goods.  It has many benefits. For example they also give the PIC bonus that gives 1 dollar per matching. It’s bonus for PYSs from 2013-15. It’s subject of total caps of USD 15000 if all of these are combined together. It is mentioned on top of current value that is consists on allowances and taxes (400%). This is an addition to expense of 60% that is under the PIC scheme.  In order to get benefits from this scheme it’s important to make claim on allowances and taxes or PIC-payout. It’s important to know that PIC is assessable. 

 

You must take benefits of PIC Bonus Singapore now, but there is some requirements for IRAS PIC-bonus that you want to know, as they’re considered to be legends. 

There’re some rules mentioned by government on how you must use this PIC Bonus Singapore. You’ve at liberty to use it in any way you like since no boundaries are mentioned.  

Some of these Rules:-

There’re no workers restrictions that’re not determined when finding the total number of workers who can get PIC bonus. This is not truth as both full and part time employee is considered.  However they’re permanent residents or citizens of Singapore. 

 Its requirements that you make C-P-F contribution to workers in your business on yearly basis. This is done after proper assessments. It’s only myth as these contributions don’t require to be made on back to back terms on consecutive months. If you will qualify for PIC-bonus, business should have CPF on payroll of min of 3 workers. 

You should claim the PIC-bonus at the same that you’re starting new business. In order to qualify for I.R.A.S PIC-bonus you should same business operations. However, it is important that you must be in this operation for its establishment.  

You may claim this bonus anytime when you’ve paid USD 5000 investment on innovation and productivity. You can follow claims for PIC bonus after performing all operations. Only businesses that are in process may get this bonus when it’s processed by IRAS.  

It’s good idea for us to claim this business when we’ve good business in Singapore. It’ll help us to defray the costs which are always on rise. It includes wages and rentals which discourages businesses from making changes in their productivity.  

However before making any claim you should get all relevant details. It’ll assist you separate the facts from mythologies. Thus, it’s defined for growth of our business. This is with realization that some small Singapore units can’t have the required amount to compete and expand fairly that Govt. has to step-in. For such companies making investment in investment is the possible way of increasing productivity. Just focus on how your company spends on research, innovations, automations, staff training and development.  Make sure, they’ve to pay taxes to Govt, innovation and productivity. PIC was announced in 2011. This is to encourage business in wide range with maximum activities.  

The productive industry is always changing. It’s important to think about this change, for wisely managed organization, it’s important to find out customer’s trend. This will provide you chance to develop services in any direction.   You can select any option that can look after your projects. This will convert your expenses to non-taxable costs. For instance, when your annual income is USD 12000 but you’ll spend USD 2000/year. You may apply for cash of USD 600. 

Automation is a technology that is also always changing. Do you want to buy any automation device or computers? Then the PIC scheme is the right choice for you. This will cover all needs and requirements (Consultation-fee, warranty-fee and other costs) of your scheme. We can get potential business and profit with the help of these schemes.  This can be obtained after proper training of employees. Your business needs new and unique features in market. It can vary from patents, designs, trademarks and plant.  When you’re planning about it then know that PIC scheme is like your rescue. 

Mostly companies want to purchase patents or copyrights for use of special designs of products. Now more companies can’t have the amount to facilitate, makes sense of I.R.A.S to enter with this methodology. Its good way to succeed in the business, but if your design is approval and accepted. 

Finally you’ll wonder about types of firms can be catered by this methodology.  It caters for sole proprietorships, partnerships and some companies. One important thing you should know that people can be excluded from this list due to low income generating. There must be no issue on it as PIC Scheme is good change. For those who wants to expand their company and increase productivity. This can be perfect change.  

With the IRAS PIC Grant some companies would continue to improve their ability of manufacturing. Thus, business is growing rapidly in Singapore. Their companies are offering many products. They’ve manufactured such product which they can also introduce in the international market. 

Hence, Increase your sales by increasing the sales team. This will make happier and productive work environment for everyone. This is time to automate your business.    

The Productivity And Innovation Credit Problems And Their Improvements

Our site www.pic-scheme.com works on the PIC scheme that was started by the government of Singapore to encourage the investments in productivity and innovation. The businesses make investments and enjoy a 400% in allowance and tax deductions and get 60% cash payouts for their investments and help in productivity improvements. Your business can also get back a 400% on allowances and tax deductions while current rules allow for 100% allowance and deductions but filing under the PIC scheme; you would get 4 times as much. If your business is eligible you can convert $100,000 of your total expenses into cash payouts without any taxes. That is expenditure for each year and all of the 6 qualifying activities. That means under the PIC scheme, more you invest in productivity and innovation,, more you will get back into your pocket. 

A PIC start up package consist of website development items, Search engine optimization (SEO), photocopier, social medial marketing; this package costs around $18, 750.

The consultants are marketing the package to help people to start the business who have just initiated it.

This is perfectly legal to work on it, making one surprised about the quality of startup emerging from such packages. PIC funds are used to create jobs in Singapore companies and provide a small company, a photocopier at a little expense. At the PIC startup firm does its homework these basic things are known as productivity or innovation expenditures.

There are many issues with the PIC scheme and suggestions about the practical ways to improving its implementation.

The Productivity and Innovation Credit has been created to provide incentives for Singapore companies to make their investment in productivity improving technology. It is being administered by IRAS with detailed information. The most positive part of the PIC is a tax deduction of 400% when any company qualifies the expenses. The option for conversion of expenses into a cash payout of 60% could not be settled but it’s a good way to help the firms in managing their cash flow and risks related to it are also managed.

For many tax payers of 2013 to 2015, a condition was added know as PIC Bonus. The PIC Bonus gives many businesses dollar for dollar matching cash bonus for YAs 2013 to 2015 subject to cap of $15000 for 3 YAs combined. YA stand for “Year of assessment”.

The PIC Bonus enables the “SGD 24,000 of PIC Benefits” which have been mentioned above: Spending $15,000 on qualifying expenditure, getting a 60% cash payout ($9,000) and a $15,000 dollar-for-dollar match. It is not making sense that there is such a substantial surplus of 60%.

PIC Bonus Singapore has also made same efforts to establish new companies.

The writers on the issue expressed shock at the surplus amount, expecting the bonus to be limited at 40% not covered by cash payout of PIC Scheme. Unluckily the IRAS response failed to address that. The intention for cash payouts was to help companies manage their own cash flow which might become a hurdle to improve their productivity expenses because there are no flexible schemes available. The payouts reproduce a 400% tax deduction at 15% tax rate. 

The benefits are being shared between joined parties. This is not an imaginary idea. Rather a common fraud is made due to issuance of invoices by anyone and PIC cash payout option turn invoices into currency.These invoices are very difficult to audit for fraud declaration. A substantial effort is required to sort out frauds. There is another risk of companies who make playful expenses because it is cheap than any other option. As claimants have no risk of their own money in this act. Tax payer money is poorly spent and goes towards inspiring the vendors and claimants they buy from. The payout of 160% arising from PIC bonus is already a fraud that gets huge.

The intention behind the PIC Scheme is very good. Giving up some tax revenue each year is a logical trade to increase productivity in the following years. There should be few measures to reduce the fraud and abuse during its application. These measures are independently followed. One is having a light track while other two are more involved. 

The challenge here is to separate the real cases from fakes. One has to observe a costly signal from the applicants; that is cheap for genuine cases and expensive from others. By using this idea, fakes would be suspended by the cost of generating the signals while genuine cases would be able to do so.

During a simple ratio test; “Real” companies possess real revenue and real operating expenses. Such companies can make a detailed record of their expenses in their accounts. The low footprint screening procedure would be able to obtain revenue and operating expense numbers and also judge the ratio of claims to revenue and the ratio of claims to operating expense.

If one is both ratios became higher; then they should set out an inspection why that happened. In some cases, IRAS might choose the acceptance and processing of the claim, while in others IRAS might ask for more information. This is a low cost measure that should be implemented.

Productivity and innovation expenditures always promote productivity and innovation. It is understood that basic business expenses should not qualify. For example website development, photocopiers, furniture, advertising are the parts of productivity and innovation expenditure. Computers, lie in a grey area. This has a low footprint and should be implemented soon.

The cost of the items falls into ranges. All applicants are required to categorize the expenditure and use this information for inspection. That could be a strong step against fraud. This is a cost estimation effort. 

Alternative rather than cash payments to Manage Cash Flow is a way for the Government to make an agreement with banks to facilitate short term loans at a low interest rate (3% per annum or even less than this); while government would pay that interest for 6 months if that expenditure has been approved. In this way companies may upgrade their operations and get large tax deduction. The PIC scheme is well intentioned and has full potential to help the business genuinely.