Productivity and Innovation Credit (PIC) legacy treatment — Complete 2026 guide

The Productivity and Innovation Credit (PIC) scheme has expired — the last Year of Assessment for which claims could be made was YA 2018. No new PIC claims are possible in 2026, but legacy issues still matter: clawback on early asset disposal, record retention, and how PIC sits alongside the incentives that replaced it.

What the Productivity and Innovation Credit was

PIC was a broad incentive that gave businesses enhanced tax deductions (up to 400%) and, for smaller businesses, a cash-payout option on spending across six qualifying activities — including the acquisition of IT and automation equipment, training, acquisition or licensing of intellectual property, registration of IP, research and development, and approved design projects. It was designed to encourage Singapore SMEs to invest in productivity and innovation.

Why PIC ended

The scheme lapsed after YA 2018. The cash-payout option ended earlier (for expenditure incurred up to a cut-off in the 2017/2018 period), and the enhanced deductions ran out with YA 2018. The Government’s policy shifted towards more targeted grants and, more recently, the Enterprise Innovation Scheme. As a result, any reference to “claiming PIC” in 2026 is necessarily about historical years, not current spending.

Productivity and Innovation Credit legacy treatment you still need to manage

PIC operated as a set of enhanced deductions and allowances under the Income Tax Act 1947, so its legacy treatment is governed by that Act and by the assessment rules it contains. Three legacy issues commonly arise. First, clawback: where PIC benefits (especially the cash payout or enhanced allowances) were claimed on equipment that was subsequently disposed of, or leased out, within one year of acquisition, the benefit could be recovered by IRAS. Companies that disposed of PIC assets should check whether a clawback adjustment was correctly made. Second, record retention: supporting documents for PIC claims should be kept for at least five years from the relevant Year of Assessment, so claims made for YA 2018 generally needed to be supported through to around YA 2023 — but documents for any reopened or audited year should be retained until the matter is closed. Third, capital-allowance continuity: assets that attracted PIC still carry ordinary capital allowances, which continue to be claimed under the normal rules.

For the underlying tax framework, our colleagues at Raffles Corporate Services set out Singapore Investment Holding Company: Tax Treatment, Concessions and Compliance (2026), and the current incentive landscape that succeeded PIC is best tracked through IRAS.

What replaced PIC

The Enterprise Innovation Scheme (EIS) now provides enhanced deductions for qualifying innovation activities, alongside targeted grants administered by various agencies. Companies that previously relied on PIC for IT and automation spending should evaluate EIS and grant options instead. Our on-site guide on How to Stack Singapore Government Grants: A Multi-Grant Strategy Guide explains how to combine multiple support schemes without double-claiming.

Numbers to remember

Last PIC Year of Assessment: YA 2018. Enhanced deduction rate: up to 400% on qualifying spend. Disposal clawback window: within one year of acquisition. Record-retention period: at least five years. Financial-statement treatment follows financial reporting standards administered by ACRA.

Common mistakes

The errors that surface in due-diligence and audits are: failing to make a clawback adjustment after disposing of a PIC asset within the one-year window; discarding PIC documentation too early; and assuming PIC is still claimable. A further mistake is conflating PIC enhanced deductions with ordinary capital allowances — the latter continue even though PIC has ended. Businesses planning to expand headcount alongside their innovation spending should also review the Singapore’s Tightening Job Market in 2026: What Foreign Professionals Need to Know to anticipate work-pass and hiring-cost changes.

What to do if you still hold PIC assets

Companies that claimed PIC in its final years sometimes still hold the underlying assets. The practical steps are: keep the original PIC claim computations and supporting invoices until any possibility of query has passed; confirm whether any disposal within the one-year window triggered a clawback and, if so, that the adjustment was made; and continue to claim ordinary capital allowances on the assets under the normal Income Tax Act 1947 rules. If you are buying a business, PIC history is a standard due-diligence item — unremedied clawbacks are a latent tax liability that should be priced into the deal or covered by warranties.

Choosing successor incentives

Because PIC has ended, the live question is which current schemes to use for new spending. The Enterprise Innovation Scheme offers enhanced deductions for qualifying R&D, IP and innovation activities, while sector and capability grants support automation, digitalisation and training. The key planning point is to avoid double-claiming the same expenditure across a grant and a tax deduction, and to keep the documentation each scheme requires from the outset, because retrofitting evidence after the fact is the most common reason claims are denied.

FAQs

Can I still claim PIC in 2026?
No. The last Year of Assessment for PIC claims was YA 2018, and the cash-payout option ended earlier. PIC is now only relevant for legacy and audit purposes.

What is the PIC clawback rule?
If PIC benefits were claimed on equipment that was disposed of or leased out within one year of acquisition, the benefit could be recovered by IRAS. Affected companies should ensure a clawback adjustment was made.

How long should I keep PIC records?
At least five years from the relevant Year of Assessment, and longer if the year is under query or audit.

What replaced PIC?
The Enterprise Innovation Scheme and a range of targeted grants now support innovation and productivity spending.

Do PIC assets still attract capital allowances?
Yes. Ordinary capital allowances on those assets continue under the normal rules even though the PIC enhancements have ended.

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.