Thinking of inflating claims under the Productivity and Innovation Credit (“PIC”) scheme? Think again.
The PIC scheme was introduced in Year of Assessment (“YA”) 2011 to encourage businesses to engage in more productive and innovate activities in Singapore. The PIC scheme provides support (e.g. enhanced tax deductions for businesses, 60% cash payout for qualifying PIC expenditure incurred, etc.) to the businesses that make investments relating to such activities.
Unfortunately, many businesses (both the buyers and sellers) have sought to maximise the benefits offered under the PIC scheme through abusive practices and arrangements. For example, there have been arrangements where suppliers artificially inflate the value of their equipment or services (which qualify for PIC benefits) in their invoices to customers such that the customers would benefit from a higher amount of PIC benefits. However, what conspires in such arrangements is that the actual amount of consideration for such equipment or services is much lower than the amount stated in the invoice. As a result, a supposedly “win-win” situation arises for both supplier and buyer as the supplier secures the sale while the buyer reaps more PIC benefits than what he is entitled to. Sounds simple and attractive? See the news reports through the links below and think again.
Measures taken by IRAS to tackle abusive arrangements
IRAS takes a serious view of any non-compliance or abuse of the PIC scheme. By law, offenders convicted of PIC fraud may pay a penalty of up to four times the amount of cash payout fraudulently obtained, and a fine of up to $50,000 and/or imprisonment of up to five years. This includes any person who wilfully assists another person with such abusive arrangements.
What to look out for when considering PIC claims
IRAS has not appointed or endorsed any independent consultant to provide advice or assistance to businesses on PIC matters. If you need assistance in respect of PIC matters, do consider the reputation and background of any consultant you approach and engage one which has the necessary competencies to advise you properly.