It was reported in IRAS’ website on 27 April 2017 that
Robofusion Asia Pte Ltd (“Robofusion”) has been convicted of giving false information in the Productivity and Innovation Credit (“PIC“) cash payout application form. Its director, Yong Tai Kok (“Yong“) has also been convicted of his role in assisting Robofusion in making the false PIC Claim.
IRAS’ Investigations revealed that Yong obtained the consent of two other people who were not employees of Robofusion, to use their names in Robofusion’s PIC cash payout application form dated 23 May 2013. Robofusion made CPF contributions to their Central Provident Fund accounts in order to represent them as Robofusion’s local employees when in fact they were not.
Robofusion’s PIC cash payout application was for the purchase of “Robofusion Generation 4 Ice Cream Kiosk” costing $93,000 on 28 Feb 2013 and “Software License and Implementation for Cashless Payment System and Kiosk Payment Integration” costing $14,980 on 29 Apr 2013. The amount of PIC cash payout which was wrongfully obtained was $60,000.
The court ordered Robofusion to pay a penalty of $60,000 for the PIC cash payout that it was not entitled to.
Yong was convicted of intentionally aiding Robofusion to, without reasonable excuse, give false information to the Comptroller of Income Tax to obtain a PIC cash payout which the company was not entitled to. The court ordered Yong to pay a penalty of $120,000, which is twice the amount of PIC cash payout that was wrongfully claimed and a fine of $4,000.
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The IRAS has issued the fifth edition of the e-Tax Guide on Productivity and Innovation Credit on 22 November 2016 with a view to incorporating the Budget 2016 changes:
- Expiry of the PIC Scheme in YA 2018,
- Reduction in the PIC cash payout rate from 60% to 40% for qualifying expenditure incurred on or after 1 Aug 2016,
- Compulsory e-Filing of PIC cash payout applications with effect from 1 Aug 2016.
Other amendments include the following:
- Remove information on PIC bonus which expired after YA2015.
- The evaluation criteria for the case-by-case approval of automation equipment (see Annex A) Remove paragraph on the clarification of the basic tool criteria c. Enhanced Writing-Down Allowance (“WDA”) and Deduction for Intellectual Property Rights (“IPRs”)
- Enhancement to allow companies to make an irrevocable election to claim the WDA over a five, ten or fifteen-year period (on a straight line basis) on capital expenditure incurred in acquiring the IPR – with effect from YA 2017.
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It was reported in IRAS’ website that a managing partner, Mr. Neo Leong Kiat of Mailcarp LLP (MC) was charged for submitting false information in order to obtain a Productivity and Innovation Credit (PIC) cash payout of $6,000 for his business which deals in email marketing solutions and software consultancy.
Neo submitted an application for a PIC cash payout based on the purchase of an automation equipment. He falsely declared that MC met the qualifying conditions for the cash payout. However, IRAS’ investigations revealed that Neo made the claim despite knowing that MC did not fulfil the condition of employing three local employees. To make his claim appear legitimate, he made CPF contributions to two individuals one day before the date of the cash payout application, in order to represent them as MC’s local employees when in fact they were not.
As a result, Neo was charged and convicted for wilful intent to assist MC to obtain a PIC cash payout which it was not entitled to by providing false information in the PIC cash payout application form. Neo was ordered by the court to pay the maximum fine of $10,000 for this charge, and a penalty of $18,000, three times the amount of the cash payout that would have been wrongfully obtained.
What does this mean to you?
You should know that IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the government. Taxpayers convicted of PIC abuse will have to pay a penalty of up to 4 times the amount of cash payout fraudulently obtained, and a fine of up to $50,000 and/or imprisonment of up to 5 years.
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