For omitting his business income from his income tax returns, Kong Kim Soon (‘Kong’; 江锦顺), 59, was sentenced to 6 months’ jail and ordered to pay a penalty of $563,537.88. Kong, who was the sole-proprietor of Catalyst Technologies (‘Catalyst’), pleaded guilty to three charges of omitting business income from his income tax returns with the wilful intent to evade tax. Three remaining charges were taken into consideration for sentencing. In default of payment of the penalty, Kong would have to serve an additional 6 months’ jail sentence.

Catalyst was in the business of selling plastic components primarily used in the consumer electronics industry.

Failure to declare business income

All individuals must declare in their annual individual income tax returns all sources of income. This includes all income that they derive from carrying on a business or a trade as sole-proprietors. Their business or trade income will be added to all other personal income which they have derived and the total income is subject to tax at progressive personal income tax rates.

IRAS’ investigations revealed that Kong had omitted business income as the sole-proprietor of Catalyst from his income tax returns for the Years of Assessment (YA) 2006 to 2008, with the wilful intent to evade tax. The total sum of omitted business income over three years amounted to $1,034,984.35. This had resulted in Kong being undercharged a total of $187,845.96 in taxes for the YAs 2006 to 2008.

Kong was aware that Catalyst had been making profits in the said YAs but he had failed to declare the profits from Catalyst in his income tax returns.

The omissions were uncovered as a result of regular Inland Revenue Authority of Singapore (IRAS) audits conducted on businesses. Using data analytics, IRAS identifies businesses that pose greater compliance risks for audit.

Reporting of tax evasion

IRAS takes a serious view of taxpayers who do not comply with the requirements of submitting proper income tax returns with the wilful intent to evade tax, and will not hesitate to bring the offenders to court. Anyone who wishes to report malpractices of others that might indicate tax evasion can write to IRAS at the address below:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987
Email: [email protected]

IRAS will ensure that the identities of informants are kept confidential.

Inland Revenue Authority of Singapore