Things You Should Know About PIC for Web Design
Are your web design costs weighing you down? Well, they shouldn’t be. The beauty of the Productivity and Innovation Credit Scheme, better known as PIC, is that you can get the support that you need at a crucial phase of the development process.
Business entities can gain significantly from the tax deductions, allowances and cash payouts linked to the scheme. As a business owner, this could mean you get to share some of the financial burdens and focus your attention on the development of your site. Get your heads up on the scheme as we share the same things that you need to know about the PIC scheme and how it impacts web design.
What is the scheme all about?
The PIC scheme was introduced in the year of 2010 and refined in the subsequent years. Essentially, the scheme is meant to encourage businesses to get tax deductions or payouts in digitalization, automation and product innovation.
The allowances or payouts are issued in order to drive businesses towards pursuing productivity improvements and to incorporate innovation as part of the company culture.
Am I eligible?
There are two main eligibility criteria – that you have an active business operating in Singapore and that the incurred qualifying expenditure is entitled to PIC during the qualifying year. For the cash payout, businesses must meet the three-local-employee condition and have a minimum qualifying expenditure of $400.
What do I stand to gain?
From 2015 to 2018, qualifying businesses benefit in 400% tax deductions or allowances up to $600,000 per year in each of the six qualifying activities (more on that later).
For cash payout, these businesses also have the option of converting up to $100,000 of total spending in all six activities for the year into a non-taxable cash payout. For expenditure incurred from 2013-2016, the cash payout is 60% while subsequent year’s expenditure (up till 2018) has a cash payout conversion rate of 40%.
Just to be clear, you’ve got to pick a side here – gaining in either the tax deductions or the cash payout, not both.
Sorry, what was that about the six qualifying activities?
- Here are the six qualifying activities under the PIC scheme:
- Acquisition and leasing of PIC IT and Automation Equipment
- Training of Employees
- Acquisition and Licensing of Intellectual Property Rights
- Registration of Patents, Trademarks, Designs and Plant Varieties
- Research and Development
- Investment in Design Projects
Source: iras.gov.sg
The good news is that web design and development falls nicely under the last, but not least, bullet point in the six qualifying activities: Investment in Design Projects.
The tax allowance or cash payout can be used to offset the cost of developing and designing a website, software application costs, and hardware and server costs. But be wary, the PIC scheme cannot be used for web hosting services, SEO services or maintenance and support services.
Think of it this way – you can use the PIC scheme to kick-start your site, but once you’ve got it up and running, the maintenance costs are yours to bear.
What are some other examples of claimable web design costs?
Aside from the points that we shared earlier, there are also other costs that can be claimed under the PIC scheme based on the web development and customized application solution project.
These include basics such as a normal HTML website design and industry-specific functions like an eCommerce system. Branching beyond the initial interface, costs of designing a Content Management Systems and even mobile application development can also be claimed under the PIC scheme.