Tag Archives: Tax Evasion

Singapore GST – Businessman Guilty of GST Fraud, Sentenced to 24 Weeks’ Imprisonment


It was reported in the IRAS’  website on 20 October 2017 that
Foo Tee Suan (“Foo”), who was the sole-proprietor of FTH Enterprise (“FTH”), partner of F&T Top System Enterprise (“F&T”) and Hwa Rong Import & Export (“HRIE”) and director of Hwa Rong Enterprise Pte Ltd (“HREPL”), has been convicted of making false entries in the GST returns of the four business entities which resulted in GST refunds totalling $458,019.69.

One of Foo’s business entities, F&T, was audited by IRAS during one of its regular audits of GST-registered businesses. During the course of the audit, IRAS’ auditors discovered that Foo had made false entries in the GST returns of F&T. The audit further discovered that Foo had also made false entries in the GST returns of three other business entities that he was involved in.

Foo’s scheme to commit GST tax fraud first began with a suggestion from Eric Chia Puay Yeoh (“Chia”), who was convicted in July 2014 of masterminding a complex GST scam using multiple shell entities. Chia suggested to Foo to voluntarily register his export business, FTH Enterprise (FTH), for GST so that FTH could claim fictitious GST refunds. Thereafter, Foo set up three other entities that were all shell companies without any business transactions.

Foo, with willful intent to evade tax, signed blank GST return forms for the four business entities and provided Chia with his SingPass in order for Chia to e-file the GST return forms for the four business entities. To illegally obtain GST refunds, Chia declared fictitious figures in the GST returns and fraudulently claimed a total of $457,749.59 in GST refunds. Foo benefitted from the fictitious GST refunds that Chia obtained and used some of the GST refund monies for his own personal expenses.

Foo faced a total of 54 GST charges of wilful intent to evade tax by making false entries in the GST returns of the four business entities. He pleaded guilty to 18 out of the 54 GST evasion charges, involving a total GST amount of $172,314.90 undercharged, with the other 36 remaining GST evasion charges being taken into consideration for the purposes of sentencing. The Court sentenced Foo to 24 weeks’ imprisonment and ordered him to pay a penalty of $516,944.70, three times the amount of tax undercharged.

What does this mean to you?

GST-registered businesses are allowed to offset the GST they pay for their purchases (input tax) against the GST they collect from sales (output tax). They pay the net difference to IRAS. Those that incur more GST on purchases than they collect from their sales can claim the difference from IRAS in the form of GST refunds.

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

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

 

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Singapore GST – Research Fellow Convicted of GST Tourist Refund Fraud


It was reported in IRAS’ website on 9 October 2017 that a research fellow, Bai Jiaming was convicted of the following GST offenses:

  • Engaging the help of a tourist to claim a GST refund of $1,543.93 for a $23,600 Tiffany & Co. diamond ring (the “ring”) purchased by him; and
  • Obtaining a Prada bag (the “handbag”) and the ring from the tourist after a GST refund of $1,791.87 had been claimed on the two items.

Investigations revealed that Bai colluded with his colleague, Zhang Baicheng and his colleague’s father, Zhang Yaoqun (“co-accused persons”) to carry out the GST refund fraud. Bai, the purchaser of the ring did not qualify for a GST refund under the Electronic Tourist Refund Scheme (“eTRS”) as he was not a tourist and was in fact, working in Singapore.  At Zhang Baicheng’s suggestion, Bai procured Zhang Yaoqun to obtain approval for a GST refund even though Zhang Yaoqun was not entitled to the said GST refund as he was not the purchaser of the ring.

On 11 Mar 2017, Bai, with a one-way air ticket to Jakarta bought on the previous day,  went with Zhang Baicheng and Zhang Yaoqun to the Singapore Changi International Airport. Zhang Baicheng and Zhang Yaoqun had return air tickets for Bangkok. All three checked in at their respective ticket counters and entered the transit area. Thereafter, Zhang Yaoqun made the GST refund claim for the handbag and the ring at the transit area in Changi International Airport, Terminal 3. Zhang Yaoqun had the said handbag and ring in his possession at the time that the GST refund was approved.

After obtaining approval for a GST refund, Zhang Yaoqun gave the handbag and ring to Zhang Baicheng who in turn gave them to Bai. Bai knew that Zhang Yaoqun had obtained approval for a GST refund of $1,791.87 under the eTRS in respect of both the handbag and ring. Bai then attempted to leave the transit area with the handbag and ring and was stopped by an ICA officer for suspected misuse of a boarding pass.

Both Zhang Baicheng and Zhang Yaoqun were charged on 28 Jul 2017 for their offenses and their cases are still pending before the court.

The court sentenced Bai to a total fine of $7,000. If he defaults on payment of the fine, he will have to serve four weeks’ imprisonment.

What does this mean to you?

IRAS takes a serious view of anyone who makes false declarations to seek GST refunds under the tourist refund scheme and abuses the scheme.    Under the GST Regulation, a person commits an offense for receiving goods from a tourist, directly or indirectly, knowing that the tourist has obtained approval for the refund. The person also commits an offense for engaging another person to seek or obtain an approval for a refund under the tourist refund scheme. Offenders shall be liable on conviction to a fine not exceeding $5,000 and in default of payment to an imprisonment for a term not exceeding 6 months.

If you have any questions regarding the above, contact support@whm-consulting.com

Income Tax – Former Director of Engineering Company Sentenced to Jail and a Penalty for Assisting in Income Tax Evasion


It was reported in IRAS’ website on 8 September 2017 that Kuah Pong Guan (“Kuah”), a former director of Wesco Engineering Pte Ltd (“WEPL”), a company involved in fabrication of metal works, has been convicted of assisting WEPL to evade tax by not reporting a total of 81 cash sales made to its customers in WEPL’s income tax returns for Years of Assessment (“YAs“) 2009 and 2010.

Investigations revealed that for these two YAs, Kuah sold metal parts to customers on a cash basis without issuing any invoices, and did not report the earnings from such sales in WEPL’s income tax returns.  Kuah did so to pocket these earnings for gambling and to pay off his own creditors.  By doing so, Kuah had also assisted WEPL to evade income tax by under-declaring WEPL’s income earned.

For YA 2009, Kuah declared WEPL’s sales income to be $62,253, understating actual income by $730,697, which resulted in income tax being undercharged by $114,109.02. For YA2010, he declared a loss of $205,475 for WEPL’s sales income, when it had, in fact, earned a profit of $77,246. This resulted in income tax being undercharged by $3,906.09.

Kuah was charged and convicted for assisting WEPL to evade income tax by providing false information in WEPL’s income tax returns for YAs 2009 and 2010. The Court ordered Kuah to pay a penalty of $354,045.33, three times the amount of tax undercharged for both YAs, and sentenced him to two weeks imprisonment.

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. In certain situations, jail terms may also be imposed.

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

Income Tax – Wholesale Trader and Company to Pay Penalties of $169,194.60 and Fine of $5,000 for False PIC Claim


It was reported in IRAS’ website on 21 July 2017 that Chin Jin Han (“Chin“), who was running a wholesale trading company, Mah Sing Pte. Ltd (“Mah Sing”), has been convicted of providing false information in the company’s Productivity and Innovation Credit (“PIC”) cash payout application form.

Chin submitted a PIC cash payout application form to IRAS, under Mah Sing’s name, in Apr 2013. He obtained the signature of Mah Sing’s sole director, his mother-in-law who left the running of the business to him, and completed all the required fields in the PIC cash payout application form.

IRAS’ Investigations revealed that Mah Sing did not purchase the two servers and three workstations (“the equipment”) at the purported cost of $93,997, as declared in the PIC cash payout application form. The invoices that showed the purchase of the equipment were false.

Both Mah Sing and Chin were convicted of giving false information to the Comptroller of Income Tax, in order to obtain a PIC cash payout and Bonus which the company was not entitled to.

The court ordered the company to pay a penalty of $56,398.20 which is a one-time penalty of the amount of the PIC cash payout that was wrongfully claimed.

Chin was convicted of giving false information to the Comptroller of Income Tax to assist Mah Sing to obtain a PIC cash payout, which Mah Sing was not entitled to when no such purchase had in fact taken place. The court ordered Chin Jin Han to pay a penalty of $112,796.40, which is two times the amount of PIC cash payout that was wrongfully claimed, and a fine of $5,000.

What does this mean to you?

IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the Government. Under the Income Tax Act, anyone convicted of an offence of abusing the PIC scheme will have to pay a penalty of up to four times 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.

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

Singapore GST – Former Manager of Export Business Jailed for GST Fraud


It was reported in the IRAS’ website on 21 July 2017 that Suneel Ramchandani (“Suneel”), the former manager of Indibiz, an export business for luxury watches and electronic products, has been charged and convicted for making fictitious declarations to enable Indibiz to claim GST refunds totaling $178,314.82.

Suneel’s eight GST evasion charges to defraud the Comptroller of GST occurred over eight accounting periods starting in July 2009. Indibiz initially started as a sole-proprietorship business of Suneel and was converted to a partnership business with one Sreyashi Sengupta (“Sreyashi”) on 16 February 2009. Suneel subsequently withdrew from the partnership on 30 March 2009 and Sreyashi became the sole-proprietor of Indibiz. However, Suneel remained as a manager and person-in-charge of the GST account of Indibiz. With the assistance of Suneel, Sreyashi registered Indibiz for GST purposes with effect from April 2009.

From Jul 2009 to Oct 2010, Suneel had made false entries in the GST returns of Indibiz, to fabricate false input tax claims and zero-rated supplies in order to enable Sreyashi to claim fraudulent GST refunds totaling $178,314.82. Investigations further revealed that a significant portion of the GST refund monies received by Sreyashi arising from the false declarations that had been e-filed by Suneel, was handed over to Suneel.

IRAS’ investigation revealed that Suneel had represented Indibiz and provided IRAS with falsified purchase invoices showing “Indibiz” as the purchaser of the goods when in fact, the purchases never took place.  Other falsified documents included purchase orders purportedly issued by Indibiz, as well as subsidiary export certificates purportedly issued to Indibiz to support the exports for zero-rated supplies, whereby no output tax will be due to IRAS.

Suneel faced a total of eight GST evasion charges for fabricating false claims to willfully assist Indibiz to obtain GST refunds that Indibiz was not entitled to. He pleaded guilty to four out of the eight GST evasion charges, involving a total GST amount of $178,314.82, with the other four remaining GST evasion charges being taken into consideration for the purposes of sentencing. The Court sentenced Suneel to 8 months’ jail and ordered him to pay a penalty of $534,944.46, three times the amount of tax undercharged.

 

What does this mean to you?

It is a serious offence to claim GST input tax on fictitious purchases or understate output tax on sales. Offenders face a penalty of up to three times the amount of tax undercharged, a fine not exceeding $10,000, and/or imprisonment of up to seven years.

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