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Budget 2016 Quick Takes: Should have modified the PIC scheme
SINGAPORE'S Finance Minister Heng Swee Keat announced in Parliament on Thursday that the Productivity and Innovation Credit (PIC) scheme, which has been extended for Year of Assessment 2016 to YA 2018, will expire thereafter in favour of more targeted measures.
Mr Heng said the cash payout rate under PIC will be lowered to 40 per cent, from the current 60 per cent for expenditures incurred on or after Aug 1, 2016. The 400 per cent tax deductions under the scheme remains intact.
Here are some comments from KPMG:
Tay Hong Beng, Head of Tax at KPMG in Singapore
"Although the PIC scheme will not be extended after it expires in 2018, it would have been apt to modify the scheme to effect a more balanced shift from productivity to value creation for the remaining 2 years."
Harvey Koenig, Tax Partner at KPMG in Singapore
"The decision to discontinue broad-based schemes like PIC in favour of targeted schemes may leave some businesses without support in their productivity and innovation efforts. The downside of targeted schemes is that they involve an application process which many smaller companies may not have the resources to undertake."