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Following the release of the Global Software Piracy Study, Singapore firms are in good stead to enjoy substantial tax credit under the PIC Scheme when they invest in authentic instead of pirated software, says company formation specialist Rikvin

According to the recently-published Global Software Piracy Study by Ipsos Public Affairs, IDC and the Business Software Association (BSA), 33% of programs used in Singapore offices and homes last year were pirated. Furthermore, the study furnished that business decision makers are more likely than other users to use pirated software more frequently and are more likely to install software for one computer on other computers in the office. At the same time, the commercial value of unlicensed software has increased to US$255 million last year.

Singapore company registration specialist Rikvin has observed that Singapore firms, especially small businesses that are concerned with keeping business costs low, are in good stead to earn 400% tax deduction or a 60% cash payout when they invest in any authentic software listed in the Productivity and Innovation Credit (PIC) Automation Equipment List.

Under the PIC scheme, the acquisition or leasing of prescribed automation equipment includes software adoption and the types of approved software are as follows:

  • office systems software
  • software for office automation service
  • enterprise resource planning (ERP)
  • customer relationship management (CRM)
  • inventory and record management
  • knowledge management (KM)
  • human resource and payroll management (HRM)
  • business management
  • accounting and assets management
  • personnel business travel request and management
  • computer-aided design system software
  • computer-aided manufacturing system software and
  • automated warehousing software

For example, if a small Singapore incorporated company were to spend S$600 on an office systems software, the business owner has the option to choose between a 1) 400% Singapore corporate tax deduction or 2) 60% cash payout. If the business owner were to choose option 1, he is eligible for S$408 in tax credit {17% corporate tax rate x (S$600 x 400%)}. This means that he saves $408 in his company taxes and will be therefore effectively paying only S$192 for the software. If he were to choose option B, he would receive S$360 in cash payouts (60% x S$600). Hence, he only pays S$240 for the software.

“Software piracy is especially unnecessary in Singapore as companies can easily tap the Productivity and Innovation Credit (PIC) scheme for software spending. Furthermore, similar deductions are granted in costs if a firm invests in R&D for developing software (excluding those used for internal routine administration of business) even if they are not meant for resale. With such benefits already in place, it does not make financial sense for companies to risk infringements of the Copyright Act,” said Mr. Satish Bakhda, Head of Rikvin’s Operations.

“Under the amended Copyright Act, it is now a criminal offence for companies to wilfully infringe copyrights for a commercial advantage. First-time offenders can face a fine of up to S$20,000 or imprisonment of up to six months, or both. BSA has also announced a S$20,000 reward for every lead which ends with successful enforcement action. We are optimistic that with the PIC Scheme in place, Singapore businesses are positioned to lead global anti-piracy efforts,” added Mr. Bakhda.

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