Income Tax – PIC Fraud


It was reported on IRAS’ website on 19 February 2016 that One IT Distribution Pte Ltd (OITPL) and its director, Alan Ang Soon Teck (Ang), have been convicted of assisting Chuan Huat Electronics Pte Ltd (CHEPL) to obtain a higher amount of Productivity and Innovation Credit (PIC) cash payout to which CHEPL  was not entitled.  CHEPL was convicted of giving false information in the PIC cash payout application form in order to obtain a PIC cash payout of $16,000.

IRAS’ Investigations revealed that Ang had instructed his staff to prepare a false sales invoice of $27,000 to CHEPL when there was no such sale transaction in the first place. CHEPL is in the business of repairing domestic electrical/electronic appliances.

With wilful intent,  CHEPL stated in its PIC cash payout application form in November 2012 that it had incurred the purchases of PIC automation equipment amounting to $27,000 and thus, it wrongfully obtained a PIC cash payout of $16,000. CHEPL  was convicted of giving false information to the Comptroller of Income Tax to obtain the PIC cash payout. The court ordered CHEPL to pay a penalty of $48,000, 3X of the amount of the PIC cash payout that it had wrongfully obtained, plus a fine of $4,000 under Section 37J of the Income Tax Act (ITA).

OITPL was convicted of wilful intent to assist CHEPL to obtain a PIC cash payout by creating a false invoice. The court ordered the company to pay a penalty of $65,200, 4X the amount of PIC cash payout that CHEPL had wrongfully obtained, and a fine of $4,000 under Section 37J of the ITA.

Ang was also convicted of wilful intent to assist CHEPL to obtain a PIC cash payout  by authorising the preparation of a false invoice. The court sentenced him to 12 days in jail and a penalty of $65,200, which is 4X the amount of PIC cash payout that CHEPL had wrongfully obtained under Section 37J of the ITA. Ang was linked to four 4 other companies – Vital Computer Group Pte Ltd, Cheapskates Pte Ltd, Vital Repair & Parts Pte Ltd and PC Geeks Pte Ltd).  All have also been dealt with separately by IRAS for making false PIC claims. In these four cases, IRAS imposed composition fees amounting to $108,800, which is 2X the amount of false PIC claims.

What does this mean to you?

Under the ITA, offenders convicted of PIC abuse will be imposed a penalty of up to 4X 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 5 years.  You are reminded that  IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the Government.

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

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