Many years ago I had a conversation with one of my good friends regarding the need to report income earned from conducting online business from Singapore in his income tax returns. My view has always been that “unless the law specifically provided otherwise, income earned by a person in Singapore is subject to Singapore income tax. In my friend’s case, his income would constitute trade/ business taxable under Section 10(1)(a) of the Income Tax Act, because he carries on his online business in Singapore. He followed my recommendations and so far so good ….
6 years later, it was reported on IRAS’ website that Chue Chia Yong (Chue) who operated a website through which he provided services, was convicted for wilfully omitted from his income tax return for the Year of Assessment (YA) 2014, the trade income of $90K he earned from operating the website. The total income tax evaded was about $6,700 and eventually he was sentenced to 2 weeks imprisonment and ordered to pay a penalty of $20K (3X the amount of income tax evaded. In default of payment of the penalty).
IRAS’ investigations revealed that Chue had with wilful intent to evade tax declared a net trade income of only $60K for YA 2014 when his net trade income earned in YA 2014, after the deduction of business expenses, was $150K. The allowable business expenses incurred included the web-hosting fees and online advertising fees Chue paid to several online forum platforms.
On the basis that Chue operates his website in Singapore and collects monthly advertising fee from his customer as income, he has the obligation to declare his net taxable income chargeable with tax in his income tax return.
What does this mean to you?
You should be aware that IRAS works closely with other law enforcement agencies and participates in multi-agency task forces to fight against serious tax crimes. Penalties for tax evasion can be up to 4X the amount of tax evaded. In certain situations, jail terms may also be imposed under Sections 96 or 96A of the Income Tax Act.
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