28 May 2007
(Subordinate Courts, Court 8, 10.00 a.m.)
TQM Pte Ltd (incorporated in 1995) and Hong Aik Management Pte Ltd (previously known as “Hong Aik Holdings Pte Ltd”; incorporated in 1970), both providers of bookkeeping and secretarial services, had prepared and submitted audited accounts to IRAS for the Year of Assessment 2003 showing that the companies were dormant when in fact, they were active and receiving sales income.
The companies have therefore committed offences under Section 96 (1)(d) of the Income Tax Act.
The directors, Ms Ong Bee Choo (47 years old) and Mr Ong Pian Boon (39 years old), wilfully with intent to assist the companies to evade tax, had authorised the preparation of false accounting records of both companies for the Year of Assessment 2003.
This morning, the 2 companies and the 2 directors were found guilty and convicted of the offences. Their sentences are as follows:
Hong Aik Management Pte Ltd - Fined $5,000 and ordered to pay a penalty of 3 times the amount of tax undercharged (i.e. $21,199.20);
TQM Pte Ltd - Fined $5,000 and ordered to pay a penalty of 3 times the amount of tax undercharged (i.e. $24,997.50);
Ong Bee Choo - Ordered to pay a penalty of 3 times the amount of tax undercharged in respect of the 2 charges (i.e. $21,199.20 + $24,997.50 = $46,196.70) and sentenced to 2 weeks' imprisonment for each charge, both sentences to run concurrently. In default of payment of the penalty, the default sentence would be 8 weeks of imprisonment for each charge and the default sentences will run consecutively; and
Ong Pian Boon - Ordered to pay a penalty of 3 times the amount of tax undercharged in respect of the 2 charges (i.e. $21,199.20 + $24,997.50 = $46,196.70) and sentenced to 2 weeks' imprisonment for each charge, both sentences to run concurrently. In default of payment of the penalty, the default sentence would be 8 weeks of imprisonment for each charge and the default sentences will run consecutively.
Modus Operandi
TQM Pte Ltd and Hong Aik Management Pte Ltd prepared and submitted false audited accounts showing that the companies had not been carrying on business and had not been deriving or receiving any income. IRAS’ investigation showed that in fact these companies were operating and receiving income.
Both TQM Pte Ltd and Hong Aik Management Pte Ltd are therefore prosecuted for having prepared false accounting records wilfully with intent to evade tax, for the Year of Assessment 2003, i.e. They entered ‘nil’ income in their accounts when in fact they had received sales income of S$97,450 and S$95,840 respectively. The directors are being charged for abetting this offence.
First Case of Its Kind
This is the first case where companies have been prosecuted for submitting accounts showing that the companies were “dormant” when in fact businesses were conducted, thereby evading the tax due.
IRAS takes a serious view of such offences. While IRAS believes that the vast majority of taxpayers are law-abiding and contribute their fair share of taxes, strong deterrent action will be taken against the small minority who are errant.
Companies are advised to comply with the submission of income tax returns and to make truthful and accurate declaration of income.
IRAS would like to remind all dormant companies that have re-commenced businesses to ensure that income tax returns are submitted and declarations of income are truthfully made. Companies that have been granted waiver for submitting of returns and accounts are reminded to be vigilant and aware of tax obligations that may arise with a change of the company’s status.
Members of the Public May Report Malpractices
Taxpayers who wish to disclose errors in their previous income reporting, or anyone who wishes to report malpractices that might indicate tax evasion may write to IRAS using the following addresses:
Email: iid@iras.gov.sg
Address: Investigation & Intelligence Division,
55 Newton Road,
Singapore 307987
IRAS will ensure that the identities of informants are kept confidential. In the spirit of encouraging voluntary compliance, past errors or omissions voluntarily disclosed are subject to less severe penalties.