Changes in Productivity and Innovation Credit Scheme Cash Payout and Trademark Application

Introduction

Intellectual property (IP) activities are among the six qualifying activities eligible for claim under Singapore’s Productivity and Innovation Credit (PIC) Scheme. This provides support to businesses that innovate or make investments to improve their productivity. If a company decides to register for patents, trade marks, designs or plant varieties, the company can be granted up to 400% tax deductions or allowances for spends of up to $400,000 per year under the scheme.

Instead of opting for tax deductions, companies can also choose to convert up to $100,000 of their spending into a non-taxable cash payout. In line with a move towards more targeted measures, the cash payout conversion rate has been revised from 60% to 40% for qualifying expenditure incurred on or after 1 August 2016 to YA 2018.

Why the need for IPRs?

To further their creative intellectual ventures, innovators and inventors can choose to have their property rights protected. These rights cover patents, industrial designs, trade secrets and layout designs of integrated circuits, as well as trade marks, which are signs used by a business to distinguish his goods or services from those of other businesses.

While it is not compulsory to register a trade mark in Singapore, exclusive rights on the use of these intellectual property means that a company will have the right to prevent others from using something similar or identical. These are intangible assets to a company and gives its partners and financial institutions the confidence to invest in or collaborate with the company.

In addition to protecting a company’s creations, intellectual property such as trade marks can also be used to protect its market share, licensed to third parties such as a franchisee, or be sold for a specified value. A trade mark can also help a brand owner raise equity for the development of its business.

How can I tap on the PIC scheme?

Businesses who wish to register their patents, trade marks, designs and plant varieties can tap on the PIC scheme to offset their registration costs. This enables businesses to lower the costs incurred while enhancing their IP management strategies.

Registration costs may include (i) official fees, which are payments made to IP registries for the application of a qualifying IP, a search and examination report, or a grant of a patent; and (ii) professional fees, which are costs incurred in relation to the registration of these IPs, such as payments to an agent who makes the applications, gives advice on the validity or infringement of one of these IPs, or prepares documents in relation to related IP Acts.

A company can opt to convert the full cost of the IPR registration of a single application into a cash payout, which will be subject to an expenditure cap of $100,000 per YA. In this case, partial conversion will not be allowed, and any amount in excess of $100,000 will be forfeited and will not be available for deduction against the business’ income.
These costs, however, can only be claimed on the condition that the company owns the registered IPRs for a minimum period of one year.

Conclusion

Beyond an integrated suite of corporate services spanning company incorporation to tax advisory services, Hawksford Singapore offers a full range of trade mark registration services and strategic advice, as well as enforcement and portfolio management services in diverse sectors.

“Intellectual property protection is becoming more important than ever for a company’s long-term viability. We recognize that trade marks, for instance, play a crucial role in creating and protecting a company’s markets, and we will continue to help our clients secure and strengthen their brand identities,” said Ms Jacqueline Low, COO, Hawksford Singapore.