Category Archives: Tax Evasion

Income Tax – Company Director and His Companies Taken to Task for Companies Act and Income Tax Act Offences


It was reported in IRAS’ website  on 1 October 2018 that the Accounting and Corporate Regulatory Authority (“ACRA”) and the Inland Revenue Authority of Singapore (“IRAS”) recently brought charges against a company director, Eddie Teoh Siah Hai, for offences under the Companies Act and in respect of four of his companies’ offences under the Income Tax Act respectively.

Breaches to the Companies Act

On 27 Aug 2018, Teoh was convicted and fined $16,800 for 14 charges at $1,200 per charge in the State Courts. Teoh pleaded guilty to the charges for offences under sections 175 and 197 of the Companies Act for failing to hold the annual general meeting (AGM), and failing to file annual returns (AR) in relation to 16 companies. A further 32 charges were taken into consideration for sentencing. Teoh will also be disqualified as director of all companies that he has been appointed to and from taking on new appointments.

The holding of AGM and filing of AR are important statutory requirements. The AGM provides a forum for shareholders to be informed of the financial position of the company, and to engage the directors of the company on the matter. Filing annual returns on time enable timely public disclosure of key information such as the health and status of the company. Company directors who fail to hold AGM and/or file Annual Returns may be fined up to $5,000 per charge. In addition, directors who have been convicted of three or more filing related offences under the Companies Act within a period of five years, can be disqualified by ACRA and will not be allowed to be a company director or take part in the management of any local or foreign companies for five years, effective from the date of conviction.

Breaches to the Income Tax Act

Teoh was company director for four companies namely, Britt Worldwide Pte Ltd, BPE-Clyde Pte Ltd, Good Technology Software Pte Ltd and Palmali International Singapore Pte Ltd, which had failed to file their Corporate Income Tax returns for the Year of Assessment (YA) 2017. Good Technology Software Pte Ltd, Palmali International Singapore Pte Ltd and BPE-Clyde Pte Ltd were fined $400 each, while Britt Worldwide Pte Ltd was fined $500.

All companies are required to file their Corporate Income Tax returns by 30 Nov or 15 Dec (if e-filing) each year. This includes companies in a loss position or with no chargeable income. Companies that fail to file their Corporate Tax Income returns may be fined up to $1,000. In addition to the fine, companies that fail to comply for two years or more shall be liable on conviction to a penalty that is twice the tax amount assessed. Company directors may be required to provide information on the company’s income, assets and liabilities. Directors who fail to furnish the requested information face a fine of up to $10,000 and/or imprisonment of up to 12 months.

What does this mean to you?

Companies and company directors are reminded to comply with statutory requirements set out in the Companies Act and the Income Tax Act. The public can come forward and alert ACRA or IRAS if they have reason to suspect that breaches to the Companies Act or Income Tax Act have taken place.

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Income Tax – Boss of interior design firm to pay penalty of more than $400,000 for under-declaring income


It was reported on IRAS’ website on 5 October 2018 that Lim Hong Hee, a proprietor of Classic Furniture Design and Renovation Works (“Classic”), an interior design firm, has been convicted for filing incorrect income tax returns for Years of Assessment (YAs) 2006 to 2009 and 2011, which had resulted in $293,977 in taxes undercharged.

IRAS detected anomalies in the declarations made in Lim’s income tax returns during one of its regular audit programmes. Investigations revealed that Lim did not report a total of $1,772,704 of Classic’s trade income in his income tax returns for YAs 2006 to 2009 and 2011. Instead, Lim paid himself a salary from Classic and only declared that employment income to IRAS for the relevant YAs, which was significantly lower than Lim’s actual trade income from Classic. This resulted in $293,977 in taxes undercharged.

Lim used Classic’s trade income for his own household expenses, as well as to purchase properties and shares. This included an investment by Lim of $845,000 in shares between 12 January 2009 and 3 October 2011.

Lim faced a total of five charges of filing incorrect income tax returns for YAs 2006 to 2009 and 2011. He pleaded guilty to two out of the five charges, involving a total of $210,673 in taxes undercharged, with the three other charges being taken into consideration for the purposes of sentencing. The Court sentenced Lim to a total fine of $10,000 ($5,000 per charge) and a penalty of $421,347, which is two times the amount of tax undercharged.

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. Taxpayers are ultimately responsible for the information declared in their income tax returns. The authority will not hesitate to bring offenders to court. Penalties for tax evasion can be up to four times the amount of tax evaded. Jail terms may also be imposed.

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Income Tax – Sole-proprietor to pay penalty for omission of income


It was reported on the IRAS’ website on 17 September that Tan Siew Hoon Pauline, the sole-proprietor of Staffing Network which provides recruitment services, pleaded guilty on 30 July 2018 to 5 charges of understating her income without reasonable excuse for Years of Assessment (YAs) 2009 to 2013.

IRAS’ Investigations revealed that Tan had only declared $444,633 in her income tax returns for YAs 2009 to 2013 when the net income earned was $1,748,058.  Further, Tan did not notify the Comptroller of GST when the taxable turnover of Staffing Network had exceeded $1m in Year 2009.

Tan was the sole signatory of Staffing Network’s bank account and she personally managed and prepared the accounts of Staffing Network. She tracked the revenue payments from her customers, made payments for Staffing Network’s operating expenses and banked in customers’ cheques into Staffing Network’s bank account.

The court sentenced Tan to pay a penalty of $344,522, which is 2X the tax undercharged of $172,261, and a fine of $17,500.  One other charge of failing to notify the Comptroller of Goods and Services Tax of her liability to be registered for GST was taken into consideration for sentencing.

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 either give incorrect returns or wilfully evade tax. Penalties for tax evasion can be up to four times the amount of tax evaded. Jail terms may also be imposed.

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Income Tax – Sole proprietor convicted for PIC sham


It was reported in IRAS’ website on 3 August 2018 that Lim
Mei Lee, who is a sole proprietor of Wahla Balloon, has been convicted and sentenced for abusing the Productivity and Innovation Credit (“PIC“) scheme by giving false information to illegally obtain PIC cash payouts and bonuses for Wahla Balloon.

Investigations by IRAS revealed that Lim gave false information to the Comptroller of Income Tax (“CIT“) by stating in Wahla Balloon’s PIC application forms that the business had incurred qualifying PIC expenditure when no such expenditure had been incurred.

The forms were submitted between November 2013 to July 2014 to claim $11,953.80 in PIC cash payouts and $13,269 in PIC bonuses for the purported expenditure of $19,923 to purchase items such as balloon inflators and to attend balloon making workshops.

Lim thus committed an offense by giving false information to illegally obtain PIC cash payouts and bonuses that she was not entitled to.

Lim faced a total of 8 charges of giving false information to the CIT to illegally obtain PIC cash payouts and bonuses. She pleaded guilty to 3 proceeded charges, involving a total amount of PIC cash payouts and bonuses of $13,204.60, with the other 5 remaining charges being taken into consideration for the purposes of sentencing. The Court ordered Lim to pay a fine of $9,000 and a penalty of $26,409.20, 2X the amount of cash payouts and bonuses illegally obtained, and sentenced her to 23 weeks’ imprisonment in default of payment.

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Singapore GST – Accomplice of GST fraud mastermind put in jail


It was reported in IRAS’ website on 2 August 2018 that
Sng Kay Heng who is a sole proprietor of Strikey Trading was found guilty and convicted of making false entries in the GST returns of his business entity, resulting in GST refunds totaling $30,806.61.

Sng was the accomplice of Eric Chan, who was convicted in July 2014 for masterminding a complex GST scam by using multiple shell entities and colluding with Sng to defraud the Comptroller of GST of GST refunds.  Sng had voluntarily registered himself for GST in October 2005.

IRAS’ investigations revealed that Sng, who elected to file his GST returns on a monthly basis, made false entries in his GST returns for the accounting periods ended November 2005, December 2005 and January 2006.

Investigations further revealed that the suppliers whom Strikey Trading had purportedly made purchases from confirmed that they did not make any sales to Strikey Trading.

Sng had claimed trial to 3 GST charges of making false entries with wilful intent to evade tax in his GST returns.  The Court sentenced Sng to 6 weeks’ imprisonment and ordered him to pay a penalty of $92,000, which is 3X of the amount of tax undercharged.

What does this mean to you?

Under Singapore GST law, it is a serious offense to claim GST input tax on fictitious purchases or understate output tax on sales. Offenders face a penalty of up to 3 times the amount of tax undercharged, a fine not exceeding $10,000, and/or imprisonment of up to 7 years.

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