Former Director of Engineering Company Sentenced to 2 Weeks’ Jail Term and a Penalty of $354,045.33 for Assisting in Income Tax Evasion

8 Sep 2017

Kuah Pong Guan (“Kuah”), 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 for two years in the Years of Assessment (“YA”) 2009 and 2010. The court sentenced Kuah to two weeks’ imprisonment and a penalty of $354,045.33 (62 days’ imprisonment in default of payment).

Facts of the Case

Kuah, during his term as the director of WEPL, did not report a total of 81 cash sales made to its customers in WEPL’s income tax returns for YAs 2009 and 2010.

Investigations revealed that for the two YAs, Kuah sold metal parts to customers on a cash basis without issuing any invoices, and did not report the earnings from these cash 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.

Court Sentences

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.

IRAS Warns Against Tax Evasion

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.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past tax mistakes. IRAS will treat such disclosures as mitigating factors when considering the action to be taken. Those who wish to disclose past mistakes, reveal evaded taxes, or report malpractices that might indicate tax evasion, can write to:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987

Email: ifd@iras.gov.sg

Cash Rewards for Informant

A reward based on 15% of the tax recovered, capped at $100,000, would be given to informants if the information and/or documents provided lead to a recovery of tax that would have otherwise been lost. All payments are at the discretion of the Comptroller. IRAS would ensure that the identities of informants are kept strictly confidential.