14 Dec 2007
(Subordinate Courts, Court 23, 9.00 a.m.)
Director of Recycling Company Jailed for Tax Evasion Meng Guan Landscape and Construction Pte Ltd (“Meng Guan”), a company in the business of processing and converting tree branches, trunks, leaves and other horticultural wastes generated from tree cutting and pruning operations to compost and fertiliser, was charged and convicted for evasion of Income Tax. Meng Guan’s director, Ms Katherine Ng Gek Cheng, was also charged and convicted for assisting Meng Guan to evade tax.
Meng Guan omitted total income of $497,376.06 from their tax returns for Years of Assessment 2003 and 2004 resulting in a tax loss of $68,628.09. Meng Guan has to account for the omitted tax to the Comptroller of Income Tax. The court sentences are as follows:
Katherine Ng Gek Cheng to be jailed 2 weeks for the first offence, and 2 weeks for the second offence, sentences to run concurrently.
Katherine Ng Gek Cheng was also ordered to pay a penalty of $205,884.27. The penalty is equivalent to three times the tax evaded of $68,628.09. In default of payment of the penalty, the default sentence would be 5 months of imprisonment for the first charge and 3 months of imprisonment for the second charge.
Meng Guan was sentenced to a fine of $6,000 and ordered to pay a penalty of $205,884.27. The penalty is equivalent to three times the tax evaded of $68,628.09.
Modus Operandi – Using Related Parties to Hide Evaded Income
Meng Guan omitted to report sales proceeds / service fees derived from three parties. Two of the parties, namely Andy Landscape Construction and Treetech General Contractors Pte Ltd, are related to Meng Guan. Andy Landscape started as a partnership run by Katherine Ng Gek Cheng. Katherine Ng Gek Cheng became the sole-proprietor when her only partner, her brother, withdrew from the partnership. With the convenience of this business, Katherine Ng Gek Cheng caused the fees paid by Andy Landscape for services rendered by Meng Guan to be deposited into her personal joint account with her husband, Tan Hiang Seng, instead of the account of Meng Guan.
Katherine Ng Gek Cheng’s sister, Ng Soo Cheng Doreen, was the soleproprietor of Chai & JL General Contractor. Chai & JL was later converted to Treetech General Contractor Pte Ltd. Doreen Ng and her husband were the directors of Treetech. The service fees from Treetech were also deposited into Katherine Ng Gek Cheng’s personal joint account.
Other than Andy Landscape and Treetech, Meng Guan also arranged for another customer to issue cheque payments to Katherine Ng Gek Cheng’s personal joint account. The successful prosecution of this case highlights that evasion involving payments made by relatives that are not deposited into a company's account could be detected and uncovered by IRAS.
Members of the Public may report Malpractices
Taxpayers who wish to disclose errors in their income reporting and anyone who wishes to report malpractices that indicate possible tax evasion may write to IRAS to using the following addresses:
Email: iid@iras.gov.sg
Address: Investigation & Intelligence Division,
55 Newton Road,
Singapore 307987
IRAS would ensure that the identities of informants are kept confidential. Errors or omission voluntarily disclosed are subject to penalties that are much lower than would otherwise be imposed had the case been audited or investigated.