Business Partner and Company Convicted for Preparing False Records to Claim Fictitious Expenses to Evade Tax
Quek Lip Ngee ("Quek") and his company, Fanco Fan Marketing Pte Ltd, have been convicted for serious fraudulent tax evasion. The Court sentenced Quek to 10 months and 2 weeks in jail and ordered to pay a penalty of $508,969, which is four times the amount of tax undercharged, on the two proceeded charges under Section 96A(1)(a) of the Income Tax Act for serious fraudulent tax evasion.
Quek had, wilfully with intent to evade tax, prepared and authorised the preparation of false books of accounts and records, for purpose of claiming fictitious expenses. He created false invoices and expense records to support the claims of fictitious expenses in order to reduce the profits of his partnership business, Fanco Fan Marketing, in his Income Tax returns. By reducing the profits of the partnership and under-declaring his partnership income, he was seeking to pay less personal income tax. Consequently, Quek under-declared his share of his partnership income by $659,355 for the Years of Assessment (YAs) 2012 and 2014, resulting in tax undercharged of $127,242.
Fanco Fan Marketing Pte Ltd was sentenced by the Court to pay a fine of $7,500 and a penalty of $50,252, which is four times the amount of tax undercharged, in July 2021. Fanco Fan Marketing Pte Ltd had, wilfully with intent to evade tax, prepared false records to support the claiming of deductions of fictitious expenses of $72,840 in its tax returns for YA 2016, resulting in tax undercharged of $12,563.
Enhanced Sentencing Framework for Tax Evasion
With the endorsement of the enhanced sentencing framework for tax evasions by the High Court on 9 June 2021, offenders will face a stiffer imprisonment sentence which takes into account the harm caused by the offender and his or her culpability, such as the quantum of tax evaded and modus operandi. The imprisonment term imposed for serious tax evasion under Section 96A(1) of the Income Tax Act may span the full range of up to five years.
Penalties for Non-Compliance
IRAS Warns Against Tax Evasion
IRAS takes a serious view of non-compliance and fraudulent 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 for serious fraudulent tax evasion. 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 action to be taken. Those who wish to disclose past mistakes or report malpractices can write to:
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.
Inland Revenue Authority of Singapore