Productivity and Innovation Credit (PIC) legacy treatment — Costs and fees breakdown

The Productivity and Innovation Credit (PIC) scheme has expired, but its legacy still surfaces in tax computations, deferred claims and IRAS reviews. Getting the historical treatment right protects against clawbacks. This 2026 guide breaks the legacy position and the compliance costs down.

Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.

What the Productivity and Innovation Credit legacy treatment means

The Productivity and Innovation Credit was a scheme that gave enhanced tax deductions and cash payouts on six qualifying activities, from automation equipment to staff training. The scheme lapsed after the Year of Assessment 2018, so no new claims arise. What remains is ‘legacy treatment’ — the correct handling of assets, deductions and any residual balances in current accounts and tax files.

Who this still affects

Companies that claimed PIC enhanced allowances on equipment are the main group affected, because those assets may still be within their writing-down periods, and disposal can trigger a clawback. Firms that received cash payouts must also be able to evidence the qualifying spend if IRAS reviews prior years. If you are planning current-year reliefs instead, the BEPS Pillar Two and 15% Multinational Top-up Tax — Costs and fees breakdown covers today’s incentive landscape.

The clawback risk explained

PIC carried a minimum ownership condition: automation equipment on which enhanced allowances or a cash payout were claimed generally had to be held for at least one year. Disposing of it earlier could trigger a recovery of the benefit. Even years later, a disposal of an asset that was within a PIC claim needs careful review before it is booked.

Costs and fees breakdown for legacy compliance

Indicative 2026 figures for the residual work:

  • Review of historical PIC claims and fixed-asset register: S$500–S$1,500
  • Clawback computation on early disposal (if triggered): S$300–S$900
  • Responding to an IRAS query on a prior-year claim: S$500–S$2,000

Most companies now incur only a modest annual review cost unless a disposal or IRAS query arises.

The statutory basis

PIC was enacted through amendments to the Income Tax Act 1947, which set out the enhanced deductions, the cash-payout option and the recovery provisions for breaches of the holding conditions. IRAS retains the power to review claims within the statutory time bar — www.iras.gov.sg.

Step-by-step: closing out PIC cleanly

1) Pull your fixed-asset register and flag any asset that carried a PIC claim. 2) Confirm each asset has passed its minimum holding period. 3) Before disposing of a flagged asset, compute any clawback. 4) Keep source documents for the statutory review period. 5) Fold the residual allowances into the current computation alongside standard reliefs. For the accounting-standards angle on asset carrying values, see www.acra.gov.sg, and for the wider compliance picture our Productivity and Innovation Credit (PIC) legacy treatment — Step-by-step walkthrough helps.

Common mistakes and gotchas

The most damaging error is disposing of PIC-claimed equipment without checking the holding condition, which invites a clawback and penalties. A second is discarding source records too early — IRAS can review within the time bar. Foreign hires linked to those projects have separate obligations; see EntrePass Singapore 2026: A Founder’s Walkthrough.

Why PIC still appears in 2026 files

Although no new claims are possible, PIC surfaces in three practical ways today: assets bought under PIC may still be depreciating through their writing-down allowances; disposals of those assets need a clawback check; and IRAS can still query historical claims within the statutory review period. A tidy fixed-asset register that flags PIC-linked assets is the single most useful control.

A worked example: disposing of PIC equipment

Suppose a company claimed the PIC cash payout on a S$30,000 automation machine and now wants to sell it. If the minimum holding period has passed, the disposal is a normal fixed-asset disposal with a balancing adjustment. If it had not passed, the payout could be recovered. Running the check before booking the sale — rather than after — is what separates a clean disposal from a penalty conversation with IRAS.

Record retention discipline

Keep invoices, payment evidence, and the original claim computations for PIC assets and payouts for the full statutory review window. If a prior-year enquiry lands, the ability to produce the qualifying-spend evidence quickly usually closes the matter without adjustment.

Related guides

Read next: BEPS Pillar Two and 15% Multinational Top-up Tax — Costs and fees breakdown; EntrePass Singapore 2026: A Founder’s Walkthrough; Productivity and Innovation Credit (PIC) legacy treatment — Step-by-step walkthrough.

Authority resources

Confirm the current rules and fees directly with the relevant Singapore authorities: www.iras.gov.sg, www.acra.gov.sg.

FAQs

Can I still make a new PIC claim?
No. The scheme lapsed after the Year of Assessment 2018 and no new claims can be made; only legacy treatment of past claims remains relevant.

What triggers a PIC clawback?
Disposing of automation equipment before the minimum holding period, or otherwise breaching the claim conditions, can trigger recovery of the benefit.

How long must I keep PIC records?
Retain supporting documents for the statutory review period so you can substantiate historical claims if IRAS enquires.

Does PIC affect my current tax computation?
Only through residual writing-down allowances on assets still being depreciated and any clawback on early disposal.

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.