Productivity and Innovation Credit (PIC) legacy treatment — Step-by-step walkthrough

The Productivity and Innovation Credit, known as the PIC scheme, was a generous Singapore tax incentive that lapsed after the Year of Assessment 2018. No new claims can be made, but legacy issues still surface in 2026, including residual deductions, clawback on early disposal of PIC assets and record retention. This walkthrough explains the legacy treatment SMEs and their accountants need to manage today.

What the Productivity and Innovation Credit was

The PIC scheme gave businesses enhanced tax deductions of up to 400% on spending across six qualifying activities, including the acquisition of IT and automation equipment, training, and the acquisition or licensing of intellectual property. A cash payout option let smaller businesses convert qualifying spend into cash. The scheme’s enhanced and cash-payout benefits ended after YA2018, so the focus now is purely on closing out legacy positions correctly.

Why legacy treatment still matters in 2026

Even though claims have ceased, several tail effects remain. Assets bought with PIC enhanced deductions or cash payouts can trigger a clawback if disposed of within the minimum holding period. Capital allowances on equipment acquired during the PIC years continue to unwind on the normal schedule. And IRAS retains audit and recovery powers over historical claims, so documentation matters.

Clawback on disposal of PIC assets

Where a business obtained the PIC cash payout or enhanced deduction on automation equipment and then disposes of, or stops using, that equipment within one year of acquisition (or the relevant qualifying period), the benefit can be recovered by IRAS. Before scrapping, selling or writing off any equipment from the PIC era, check the acquisition date and whether a clawback is triggered, and disclose it in the tax computation.

Record retention and audit exposure

The Income Tax Act 1947 requires taxpayers to keep business records for at least five years. For PIC, retaining invoices, training records, IP agreements and the original claim computations protects the business if IRAS reviews a historical claim. Where records have been lost, a voluntary disclosure is generally better than waiting for a query.

How residual capital allowances unwind

Equipment acquired in the PIC years still carries ordinary capital allowances under sections 19 and 19A of the Income Tax Act 1947. These continue to be claimed on the normal basis until fully written down, independent of the expired PIC enhancement. Accountants should ensure the fixed-asset register separates the base cost (eligible for ordinary allowances) from any expired PIC enhancement.

What replaced PIC

Singapore has shifted support towards targeted grants and newer incentives rather than a broad enhanced-deduction scheme. Businesses planning capital or innovation spend in 2026 should look at current grant programmes and the prevailing Budget measures rather than expecting PIC-style automatic enhancements.

Official sources

Always confirm current rules and fees against the primary sources: www.iras.gov.sg, www.asc.gov.sg, www.acra.gov.sg.

Related guides

FAQs

Can I still claim the Productivity and Innovation Credit?
No. The PIC scheme lapsed after YA2018 and no new claims, enhanced deductions or cash payouts are available.

Can disposing of old PIC equipment cost me money?
Yes. Disposing of PIC-supported equipment within the minimum holding period can trigger a clawback of the benefit by IRAS.

How long must I keep PIC records?
At least five years under the Income Tax Act 1947, covering invoices, training records and the original claim computations.

Do capital allowances on PIC-era assets continue?
Yes. Ordinary capital allowances under sections 19 and 19A continue to unwind on the normal schedule even though the PIC enhancement has expired.

Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.