Income Tax – Project Manager used Shell Entity and Falsified Records


It was reported in IRAS’ website that a former project manager of Yongsheng Engineering Pte Ltd (“YEPL”), Tang Lai Seng, was sentenced to 7 months in jail for wilfully omitting $321,000 in his income tax returns for Years of Assessment (“YAs”) 2011 and 2012, and thereby evading income tax of some $41,000.  He was also ordered to pay a penalty of $166,000 which is 4 times of the amount of tax evaded.

Tang was employed as a project manager by YEPL from May 2009 to February 2012. He was to receive a share of profits from a project in Sin Ming Drive (the “Sin Ming Drive Project”) as part of his remuneration.  In Aug 2010,  he set up a sole proprietorship, TLS Enterprise, for the sole purpose of evading income tax on his share of the profits from the Sin Ming Drive Project. This was a shell entity without any business transactions.

IRAS’ investigation revealed that Tang had approached representatives from two construction entities, and entered into schemes with them to create fictitious contracts for non-existent construction services, to support claims by TLS Enterprise for expenses. TLS Enterprise issued invoices to YEPL for sub-contracting works for his share of the profit in the Sin Ming Drive Project, and claim expenses for works allegedly carried out by two construction companies through 8 fictitious invoices over YAs 2011 and 2012 . As a result, Tang  under-declared his income by $321,000, and the amount of tax undercharged was $41,000.

Tang pleaded guilty to two charges under Section 96A of the Income Tax Act for falsifying records resulting in tax evasion.  Under this section, a person who is convicted is liable to pay a penalty of four times the amount of tax evaded, and a fine of up to $50,000, or a jail term of up to five years, or both.

 

What does this mean to you?

IRAS takes a serious view of non-compliance and tax evasion. There will be severe penalties for those who wilfully evade tax.

If you have any questions, please contact us at support@whm-consulting.com.

Be Well!

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