Software
Businesses may enjoy Productivity and Innovation Credit (PIC) benefits on the cost incurred to acquire or lease equipment that are in the prescribed PIC IT and Automation Equipment List. Software falls within category 4 of the prescribed list. In this respect, any purchase, lease or payment for the rights to use the software would be eligible for PIC benefits if it is used for the purpose of the company’s trade to produce income in Singapore. However, please note that costs relating to data migration, software maintenance and support services are all not eligible for PIC claims.
For more information on the eligibility of software for Productivity and Innovation Credit (PIC), you may refer to the Frequently Asked Questions listed at the bottom of this webpage on IRAS’ website.
Website
Qualifying expenditure incurred on the provision of a new website from Year of Assessment (YA) 2014 to YA 2018 will be eligible for PIC,if the website is developed for use in the business to produce income. Though website does not fall within the prescribed PIC IT and Automation Equipment List, Section 19A(16A) of the Income Tax Act (ITA) has specifically recognised the capital expenditure incurred on the provision of a website for the purposes of a trade, profession or business as qualifying costs for the purpose of PIC claims. In this regard, companies do not have to obtain approval from IRAS before developing new website.
Qualifying website development costs include:
- One-time registration of domain name
- Website development or purchase costs, including design costs
- Software application development costs
- Hardware and server costs
Non-qualifying costs include:
- Renewal or purchase of domain name
- Web hosting services
- Online advertising/marketing services (e.g. Search Engine Optimisation, Search Engine Marketing, etc)
- Routine updates
- Maintenance and support services
In addition, the revamp of an existing website does not qualify for PIC as it is not provision of a new website.
However, if there are costs incurred on the addition of e-commerce functions to the website or enhancing it to become mobile responsive, these costs will be eligible for PIC as such enhancements are regarded as software development which falls within item 4 of the prescribed PIC IT and Automation Equipment List. Other website revamp or enhancement costs such as routine updating, re-writing of contents, maintenance and support services do not qualify for PIC.
Your company is required to perform a self-evaluation or engage your vendors in providing a breakdown of costs and in verifying the nature of such costs.
In addition, please note that the granting of PIC benefits is subject to the company meeting all the qualifying conditions under the PIC scheme.
For information on the eligibility of website development cost for Productivity and Innovation Credit (PIC), you may refer to the Frequently Asked Questions listed at the bottom of this webpage on IRAS’ website.
Thank you.
