The expiry of the PIC scheme threatens to make Singapore’s R&D tax incentive one of the least attractive globally, even as other countries enhance their R&D schemes.
With the expiry of the PIC scheme in Year of Assessment 2018, businesses will lose out on a valuable support to transform their businesses and sustain innovation.
In KPMG’s recent pre-budget poll, 58% of respondents indicated that they would like to see more Government support strengthen Singapore enterprises, and support efforts in innovation, R&D and value creation.
The advent of the digital economy requires continuous and sustained innovation. In such a highly competitive environment, it is imperative that Singapore businesses are not disadvantaged because of lower government support of R&D. Businesses in Hong Kong would have up to 49.5% of tax savings as a percentage of R&D expenditure, while Ireland and China would have up to 37.5%. Singapore is currently lagging behind at 25.5%. We therefore recommend increasing the R&D tax deductions to 300% of expenditure, from the current 150%.
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