Under PIC, businesses that have incurred R&D expenses can claim enhanced deductions against their income taxes or apply for a cash payout.
IRAS currently processes three out of four such applications for cash payouts within three months. More than 90% applications are processed within six months.
The R&D expenditure incurred by businesses that claimed PIC enhanced deductions varied widely and averaged $450,000 among SMEs. Such claims are processed as part of normal tax returns. While this reduces additional paperwork for most claimants as they need not submit a separate PIC claim, complex claims will still take more time to review. Additional time is also taken when businesses do not provide all the necessary information to substantiate their claims.
MOF and IRAS have consulted tax professionals and industry representatives on how we can provide more helpful guidance to businesses making PIC claims on R&D. We will be releasing later this month a revised e-tax guide which will provide more clarifications on the R&D qualifying criteria, explain the review process for R&D claims, and highlight the documentation that companies can use to substantiate their claims.
The revised guide should help businesses with their R&D claims, and reduce the need for IRAS to go back to the business to request for additional information. To further help smaller businesses, IRAS will publish a simplified set of guidelines on its website and work with them to identify alternative ways of supporting their R&D claims. IRAS will also provide more examples of qualifying industry-specific R&D activities starting with the Information, Communications and Technology (ICT) sector and the Food & Beverage (F&B) industry. These examples will be published by the end of the year. In addition, it plans to expand the Technical Advisory Panel of independent experts, comprising academics in science and technology as well as industry representatives, to provide stronger support in complex R&D cases.
We will continue to review the administration of the PIC scheme and welcome suggestions that will help us to improve the claims process.