Many Singaporean entities are struggling with the same questions. How do I innovate in difficult economic conditions? How do I improve my business productivity, so I keep profit margins stable even while revenue is under pressure?
It surprises us that many Singaporean entities don’t know about the Productivity and Innovation Credit (PIC) Scheme run by IRAS. “Under the PIC Scheme, businesses can enjoy 400% tax deductions/allowances and/or 60% cash payout for investments made in any of the Six Qualifying Activities from the Years of Assessment (YAs) 2013 to 2018.”
There are six “qualifying activities” under the PIC scheme, the first of which is “Acquisition and Leasing of PIC IT and Automation Equipment”. Items in the list include:
“Information technology software including office system software and software used in connection with provision of any office automation service, enterprise resource planning, customer relationship management such as reservations, registration, queue management, ordering, billings and collections, inventory management, record management, knowledge management, human resource and payroll management, financial information and business management such as accounting and assets management, and personnel business travel request, information and management.”
The bold highlighting is ours – we are focussed on service management and customer success, after all – but also note you are entitled to a “100% accelerated writeoff for capital allowances” on these items.
So where does the $60,000 come from? Simple. There are two ways to claim PIC deductions:
- You take the “cashback” option and get back 60% of a $100k investment, so $60k in straight cash. OR:
- You take the “tax deduction” option. The Tax Deduction option lets you claim up to 400% of appropriate spend (max $600k) per year. So you can claim up $600k x 400% = $2.4m, and at the company tax rate of 17% that’s $408,000. So your $600k investment is actually only costing you $192,000 – an effective 68% discount!
Please note – CloudGo is not a financial services firm, this is advice only and conditions apply. Please check with IRAS, your accountant or specialised firms like GAC Group who can help you make any claim.
So what does this mean to you?
CloudGo can help you pull together a first project around customer success or service management, and your investment in software like Salesforce, ServiceNow, Devicedesk or DocuSign can be offset. Hence, your project doesn’t have to jump as many hurdles to show a successful ROI.
We’ll be running a webinar on this in late March. To register for it, or for more information, please contact us.