According to IRAS, 5 offenders have been prosecuted who are involved in PIC abuse cases. At the same time, IRAS is also actively investigating into several cases of alleged PIC abuses.
It was reported in IRAS’ website on 16 October 2015 that RC Components Pte. Ltd. (“RCPL”) and its director, Chan Keng Chun (“Chan”), have been convicted of providing false information in RCPL’s Productivity and Innovation Credit (“PIC”) cash payout application form.
RC Components is a distributor of computer memory products and hardware accessories. Through IRAS’ investigations, it was found that RCPL submitted an application form dated 22 May 2012 to claim for a cash payout under the PIC scheme. RCPL declared in the application form that it had incurred $77,202 in time costs for five employees purportedly for developing software systems. However, there was no such development of software systems and the five employees did not spend any time on development of software systems. A PIC cash payout of $23,160.60 would have been disbursed to RCPL had IRAS not detected the false claim made by RCPL.
RC Components was charged and convicted of giving false information without reasonable excuse to the Comptroller of Income Tax to obtain the PIC cash payout, which it was not entitled to. The company was ordered by the court to pay a penalty of $46,000, which is 2x of the amount of the PIC cash payout that would have been wrongfully obtained, and a fine of $2,500.
Chan was charged and convicted of giving false information without reasonable excuse to the Comptroller of Income Tax to assist RCPL to obtain a PIC cash payout. He was ordered by the court to pay a penalty of $46,000, which is 2X of the amount of PIC cash payout that would have been wrongfully obtained, and a fine of $2,500.
What does this mean to you?
Under Section 37J of the Income Tax Act. offenders convicted of PIC abuse will have to pay a penalty of up to 4X of the amount of PIC cash payout fraudulently obtained or which would have been obtained if the offence had not been detected, and a fine of up to $50,000 and/or imprisonment of up to five years.
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