Tax

Singapore Budget 2018 Part 1 of 3 : Productivity Solutions Grant 2018

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The Government announced a slew of measures to help businesses innovate, including a new Productivity Solutions Grant, and tax deductions on licensing payments for the commercial use of intellectual property, as well as intellectual property registration fees.

The Productivity Solutions Grant ( PSG ), which will be effective from 1 April 2018, comes as a streamlined version of existing grant schemes that support businesses in buying off-the-shelf productivity solutions, such as the well-subscribed Productivity and Innovation Credit (PIC) scheme that expired.

The new PSG will provide businesses with funding support for up to 70 per cent of qualifying costs, versus the PIC’s 60 per cent, or up to S$100,000, for investments to improve innovation and productivity.

In place of the PIC’s 400 per cent tax deductions that are capped at S$400,000, the Government is going with a 200 per cent tax deduction, capped at S$100,000 on licensing payments per year, with effect from Year of Assessment (YA) 2019 to YA2025.

This cap ensures that smaller businesses will benefit more from this measure.

To support businesses in building their own innovations, the tax deduction on intellectual property registration fees will be raised from 100 to 200 per cent so that firms can protect their intangible assets. This fee will be capped at S$100,000 of the registration fees a year.

Hope this summary helps.

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Written by Kelvin Loh