Singapore IRAS PIC Website Development Grant Claim

By July 31, 2016ICV / PIC Claim, Web Design
singapore iras pic grant claim website development

1. Productivity and Innovation Credit (PIC)

PIC is an initiative from the Singapore Government and it is administered by Inland Revenue Authority of Singapore, IRAS. PIC was first introduced in Budget 2010 and enhanced in Budgets 2011 to 2015. The aim of the PIC Scheme is to encourage businesses to invest in productivity and innovation activities. Seemingly, the PIC grant seeks to better three business aspects for companies in Singapore. First, to inculcate a culture for businesses to embrace workforce development, a human resources strategy to improve the skills of workers which eventually favours the bottom lines of the company. Second, to embrace innovation and be a trailblazer in your trade which ultimately creates unique values to the community and region. Third, to increase productivity through the use of technology and equipment which betters your efficiency in production. It’s a season to usher productivity and innovation activities into your business!

Have you ever considered an online presence for your company or business? In the present time, businesses cannot rely solely on a brick and mortar business model. To flourish, they have to integrate marketing strategies to bring traffic to their store or business. There is a shift in consumer’s behaviour habits with the advancement of technology and availability of high-tech devices. A website can well be the most cost-effective marketing platform for your brand. Find out how you can build your website and claim the expenditure for PIC.

2. How Does a Website Benefit Your Business?

Websites serve by providing necessary information to your prospects, enticing and persuading them to make responses favourable to your bottom line. A website can increase productivity for your business. It streamlines processes and work procedures. Content Management System (CMS) on web designs are common. CMS makes updating content on your website a breeze. You can change textual information on your website with no knowledge on computer programming. You can update images in your photo gallery with simple steps. In short, CMS makes the business self-sufficient in updating its own website contents. It increases productivity by reducing the time to perform the updates when compared to static websites written in HTML.

3. Does Website Development Qualify for PIC Grant?

Yes! From YA 2014 to YA 2018, PIC benefits may be claimed on capital expenditure incurred on developing your business website which include the one-time registration cost that is incurred for your domain name. Web development falls under the category of ‘Acquisition & Leasing of PIC IT & Automation Equipment,’ which is one of the six activities identified by IRAS that qualify for PIC.

pic acquisition leasing it automation equipment website
Acquisition & Leasing of PIC IT & Automation Equipment

pic training employees
Training of Employees

pic acquisition licensing intellectual property rights
Acquisition & Licensing of Intellectual Property Rights

pic registration patents trademarks designs plant varieties
Registration of Patents, Trademarks, Designs & Plant Varieties

pic research development
Research & Development

pic investment design projects
Investment in Design Projects

4. How Does the Benefits of PIC Grant Apply to Your Website Development?

The PIC Scheme continues to bring benefits to businesses in two ways, namely through the PIC+ Scheme and/or Cash Payout. Qualifying businesses can receive up to 400% Tax Deductions/Allowances and/or 40% Cash Payout for their qualifying expenditures. In the context of a website development, a business can either apply for PIC+ Scheme or Cash Payout. The reason for this is that election for claim is on ‘per equipment’ basis (cannot claim Tax Deduction and Cash Payout on the same equipment).

PIC+ Scheme (Tax Deductions/Allowances)

pic 400 percent tax deduction allowance

As announced in Budget 2014, from YA 2015 to YA 2018, qualifying businesses can enjoy 400% tax deductions/allowances on up to $600,000 of their expenditure per year in each of the six qualifying activities under the PIC+ Scheme. The maximum combined expenditure cap for YA 2016 to 2018, is up to $1,800.000.

Visit IRAS to read more on PIC+ Scheme.

Cash Payout

pic 40 percent cash payout

Eligible businesses can apply to convert up to $100,000 of their total expenditure for each YA in all six qualifying activities into a non-taxable cash payout. The cash payout rate is 40% of qualifying expenditure incurred. The expenditure converted is not tax deductible.

Visit IRAS to read more on PIC Cash Payout.

Scenario 1: Claim for Tax Deduction for Your Website Development

pic example claim tax deduction allowance
In this scenario, your company decides to convert the expenditure on website development of S$5,000 to a Tax Deduction for YA 2017. Your company will receive an Enhanced Deduction of S$15,000 and Base Deduction of S$5,000 for YA 2017.

Scenario 2: Claim for Cash Payout for Your Website Development

pic example claim cash payout
In this scenario, your company decides to convert the expenditure on website development of S$5,000 to a Cash Payout for YA 2017. Your company will receive a Cash Payout of S$2,000 for YA 2017.

5. What are the Criteria and Qualifying Conditions for PIC Claims?

To qualify for the PIC+ Scheme, businesses must have:

  • active business operations in Singapore,
  • incurred qualifying expenditure and are entitled to PIC during the basis period of qualifying YA,
  • a revenue that is not more than $100 million or an employment size that is not more than 200 employees.

This criteria will be applied at the group level if the business is part of a group.

To qualify for the PIC Cash Payout, businesses must have:

  • active business operations in Singapore,
  • incurred qualifying expenditure and are entitled to PIC during the basis period of qualifying YA,
  • meets the three-local-employee condition and
  • minimum qualifying expenditure of $400 for each cash payout option application.

6. Commonly Asked Questions

Do website development costs and web hosting fees qualify for PIC Claim?

For website development costs incurred from YA 2014 to YA 2018, PIC benefits can be claimed on capital expenditure on developing a website which also includes the costs for the one-time registration of a domain name for the website. Web hosting fees do not qualify for PIC Benefits. Nevertheless, if you’re able to provide a breakdown of the web hosting fees, such as software and server, PIC benefits may be granted on costs incurred for the acquisition/leasing of PIC IT and Automation Equipment.

What are some examples of qualifying and non-qualifying website development costs?

EXAMPLES OF QUALIFYING COSTS

EXAMPLES OF NON-QUALIFYING COSTS

One-time registration of domain name Renewal or purchase of domain name
Cost of developing or purchasing the website, including design fees Web hosting services
Software application development costs Online advertising/marketing services (e.g. providing Search Engine Optimisation (SEO) services, Search Engine Marketing (SEM) services, etc)
Hardware and server costs Routine updates, re-writing of contents, maintenance and support services

Does the revamp of an existing website qualify for PIC Claim?

The revamp of an existing website is not considered a provision of a new website and thus, it does not qualify for PIC. But, if there are costs incurred on the incorporation of e-commerce functions to the website or enhancing it to become mobile responsive, these expenditures will be eligible for PIC as such enhancements are regarded as software development.

Can I make PIC claims before my software or website development are completed?

No, you cannot claim PIC Cash Payout if your software or website is under development. The claim can only be made when it is fully developed. But, if the development of your software or website is by modules and the completed module can function independently, you can claim PIC Cash Payout after each module is completed. If you are claiming enhanced allowance over one year under Section 19A(2), the software or website must be fully developed and installed before making the claim. To claim enhanced allowance over three years under Section 19A(1), the software or website does not need to be fully developed and installed before the claim. The cost incurred in the related YA will qualify for enhanced allowance over three years. 

Note: PIRR Creatives does not represent Inland Revenue Authority of Singapore (IRAS) nor the PIC. The approval and payment of the respective claims lie within the sole discretion of IRAS. For an accurate and complete read about the PIC, please visit the IRAS website.

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