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The National Productivity and Continuing Education Council (NPCEC) will support businesses that are re-engineering their work processes and re-designing jobs to help their employees create more value. It will support their efforts to innovate – to gain competitiveness, come up better offerings of new products and services, and generate new or additional revenue streams.

Productivity and Innovation Credit

At Budget 2010, the Government announced the set-up of the Productivity and Innovation Credit (PIC) to provide significant tax deductions, for investments in a broad range of activities along the innovation value chain. The PIC will be available for five years, (from Years of Assessment 2011 to 2015), and will cost the Government $480 million annually.
Specifically, the PIC will cover spending on the following activities along this innovation value chain:

• Research & Development;
• Registration of intellectual property – including patents, trademarks, and designs;
• Acquisition of intellectual property – for example, when a company buys a patent or copyright for use in its business;
• Design activities;
• Automation through technology or software; and
• Training of employees.

All businesses will be eligible for the Credit, based on the amount they invest in any of the activities covered by the Credit. They can deduct 250% of their expenditures on each of these activities from their taxable income. The enhanced tax deductions are capped at $300,000 of expenditures for each activity so as to focus the benefits on our companies. To support small but growing businesses which are cash-constrained, businesses are also given the option to convert up to $300,000 of their PIC from a year into a cash grant of up to $21,000.

Currently, only research and development work qualify for higher tax deductions, of up to 150% of expenditures. The new PIC will spur a much broader range of innovative activities as well as provide an unprecedented level of tax deductions, at 250% of expenditures on each activity. In addition, businesses who are investing in the training of their employees can now enjoy the tax benefits under the PIC on top of the various WDA subsidies, including the new Workfare Training Scheme.

National Productivity Fund

A new National Productivity Fund (NPF) will also be established to complement the Productivity and Innovation Credit (PIC) for all companies which invest in innovation. The funding for innovative initiatives can be customised to specific industries, clusters, and enterprises.

The NPF will provide grants to help enterprises in all sectors, with special emphasis initially on sectors where there is potential for large gains in productivity. The Fund can also be used to develop centres of expertise for a range of industries. This will help grow a knowledge base for enterprises to tap on to develop productivity solutions.

The Government plans to put $2 billion into this new fund. The NPF will start off with $1 billion in 2010 which is expected to support initiatives till 2014.