Li Longyi (“Li”), 46, former director of Wooleejeep Pte Ltd (“Wooleejeep”), has been ordered by the Court to pay fines and penalties totalling $124,058 after being convicted of omitting a total income of $348,276 in Wooleejeep’s Form C Income Tax Return for Year of Assessment (YA) 2011, failing to register Wooleejeep for Goods and Services Tax (GST) in 2009, and failing to keep business records between 2009 and 2012. Wooleejeep operated food stalls at food courts.
Li faced one charge of omitting Wooleejeep’s actual income earned in its Form C Income Tax Return, resulting in a total of $49,207 in taxes undercharged for YA 2011. The Court imposed a fine of $3,000 and a penalty of $98,414 which is two times the amount of tax undercharged.
For failing to register Wooleejeep for GST when the company’s revenue had exceeded the $1 million threshold by the end of quarter ending 30 September 2009, the Court ordered Li to pay a penalty of $1,500, which is 10% of the GST due, and a fine of $17,644.
Li also faced one charge of failing to properly maintain records, including business and accounting records, food court statements and invoices from Wooleejeep’s suppliers or vendors, for a period of not less than 5 years. The Court ordered him to pay a total fine of $3,500.
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.
Penalties for Non-Compliance
IRAS Warns Against Tax Evasion
With the endorsement of the enhanced sentencing framework for tax evasion 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, the degree of planning and premeditation and sustained period of offending. The imprisonment term imposed for tax evasion under Section 96 of the Income Tax Act may span the full range of up to three years.
All businesses, including individuals deriving income from their trade, profession or vocation, should closely monitor their income on a calendar year basis to assess if they need to register for GST.
If their 12-month taxable turnover has exceeded $1 million at the end of the calendar year, they will be required to apply for GST registration within 30 days.
Any business that fails to register for GST is still required to pay GST on all their past transactions from the date the business became liable for GST registration. GST is payable even if the amount was not collected from customers. In addition, failure to register for GST is an offence and businesses may be required to pay 10% of GST due as a penalty and fined up to $10,000.
Keeping Proper Records
IRAS would like to remind all taxable persons to keep proper records and accounts of all their taxable transactions. Records pertaining to income tax must be retained for a period of 5 years from the relevant YA, while records pertaining to GST must be retained for a period of not less than 5 years from the prescribed accounting period. Those who fail to do so may be liable on conviction to a fine and/or a jail term.
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: [email protected]
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