Law Yu Hong ("Law"), a 53-year-old director of Ho Sin Pte Ltd (“HSPL”) which is in the business of electrical and metal subcontracting works, has been convicted by the Court for abetting HSPL to give false information to the Comptroller of Income Tax in its Productivity and Innovation Credit (PIC) cash payout application form. The form submitted to IRAS stated that HSPL had incurred $80,000 in qualifying PIC expenditure for a machine when in fact the purchase amount was only $48,000. Law was one of the claimants linked to the case of Ng Cheow Chai, director of SMS Machinery (S) Pte Ltd, who was the mastermind behind the PIC scam.
Law is also the first person to be convicted for giving false information to the Inland Revenue Authority of Singapore (IRAS) during its criminal investigations. As part of the scheme to make a false PIC claim, HSPL had forged commercial documents to create a false transaction between Ng Cheow Chai’s partnership business and HSPL. This was done to conceal the repayment of the surplus amount over the actual purchase price of the machine received by SMS Machinery (S) Pte Ltd back to HSPL. When asked about the aforesaid transaction, Law lied that the transaction was genuine and withheld the truth from IRAS when he knew that the transaction was fictitious.
The Court found Law guilty under Section 37J(2) of the Income Tax Act for submitting false information to the Comptroller of Income Tax without reasonable excuse to obtain a higher PIC cash payout than HSPL was entitled to. He was ordered by the Court to pay a penalty of $38,400, which is twice the amount of the PIC cash payout that would have been wrongfully obtained, and a fine of $5,000.
For furnishing false information to IRAS under Section 65C(8) of the Income Tax Act (Cap.134), the Court sentenced him to 10 days' imprisonment.
IRAS' audit programme uncovered the offence
IRAS runs 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.
Severe Penalties for Abusing the PIC Scheme
IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the government. Offenders convicted of abusing the PIC scheme will have to pay a penalty of up to four times the amount of cash payout fraudulently obtained, and a fine of up to $50,000 and/or imprisonment of up to five years.
Serious Consequences for Providing False or Misleading Information or Statement to IRAS
IRAS takes a very serious view of any individual who intentionally provides false or misleading information to IRAS in the course of investigations to obstruct IRAS from the proper administration of its functions. One may also be guilty of a criminal offence for providing false or misleading information to IRAS officers in the course of queries from IRAS. Any person found guilty of such an offence under the law shall be liable on conviction to a fine not exceeding $10,000 or imprisonment for a term not exceeding 2 years, or with both.
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
Email: [email protected]
Cash Rewards for Informant
A reward based on 15% of the tax recovered, capped at $100,000, will 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