Imprisonment and Tax Penalty for Business Partners for Evading Income Tax

11 Dec 2019

Ting Joo (“Ting”) and Tay Swee Choong (“Tay”), the 2 recognized partners of Steelweld Construction (“SC”), a business dealing in piping and structural steel fabrication and installation, were charged and convicted for claiming fictitious business expenses in order to reduce their own personal taxable income for the Years of Assessment (YAs) 2010 and 2012 to 2014. Between the two partners, the fictitious business expenses resulted in an under-declared income amount of over $3 million and $630,817 in taxes undercharged. 

Both Ting and Tay each faced a total of four charges under the Income Tax Act for making false entries in their own personal income tax returns with the wilful intent to evade tax amounting to $274,217 and $356,600 respectively.

Ting was sentenced to pay a penalty of $515,430, which is three times the amount of income tax evaded in the two proceeded charges and 8 weeks’ imprisonment. Tay was sentenced to pay a penalty of $659,004, three times the amount of income tax evaded in the two proceeded charges and 8 weeks’ imprisonment. Their respective two other charges were taken into consideration for the purpose of sentencing. 


Penalties for Non-Compliance

IRAS' audit programme uncovered the offence

IRAS runs regular audit programmes across various industries to ensure tax compliance among individuals, businesses and the self-employed. Using data analytics and advanced statistical tools, IRAS is able to cross-check data and detect anomalies. This case was uncovered through one such audit programme.  

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. The authority will not hesitate to bring offenders to court. Offenders may face a penalty of up to four times the amount of tax evaded. Jail terms may also be imposed.

Fictitious or Private Expenses

For income tax purposes, business expenses claims should not include fictitious expenses or expenses that are private in nature such as private entertainment and luxury goods expenses.

 

Cash Rewards for Informants

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

 

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 action to be taken. Those who wish to disclose past mistakes or report malpractices can write to:

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

Email: ifd@iras.gov.sg

 

Inland Revenue Authority of Singapore