Client to pay more than $740,000 in penalties for failing to register for GST and under-declaring income
Tax agent Yeo Tiam Chye ("Yeo"), 59, was convicted of two charges for assisting his client, Lim Long Huat ("Lim"), 57, in under-reporting revenue figures in order that his client’s business turnovers will not exceed the Goods and Services Tax ("GST") registration threshold of $1 million. For engaging in the conspiracy, Yeo was ordered to pay a fine of $7,000 and a penalty totalling $76,177, a sum that is 10% of GST due.
Lim was a businessman involved in various renovation sole proprietorship and partnership businesses including that of Just Design and Contract, Poh Leong Trading and Renovation, and Ching Yap C.Y. Design and Contract. For giving incorrect information to the Inland Revenue Authority of Singapore (IRAS) in relation to his income tax, as well as for failing to register his businesses for GST, Lim was sentenced to $17,000 in fines and $741,344 in penalties. In addition, Lim is required to pay $1,136,105 in back-dated taxes to IRAS.
Summary of Case
Lim and Yeo had a standing arrangement for Yeo to under-report the tax filings of Lim’s various businesses such that Lim could avoid registering himself and his businesses for GST. In order to keep the revenue figures of Lim’s businesses below the GST registration threshold, Yeo arbitrarily reduced them before submitting the P&L statements and income tax returns of Lim and his businesses to IRAS.
Penalties for Non-Compliance
Errant Tax Agents
IRAS takes a serious view of such offences by errant tax agents. Tax agents, especially accountants, have an extensive knowledge and understanding of Singapore’s tax system and are expected to be compliant with their own tax reporting obligations.
IRAS also views tax agents as key partners in helping taxpayers fulfil their tax obligations and they should provide tax advice in accordance with tax laws. The majority of tax agents perform their duties ethically and professionally. IRAS will take deterrent actions against tax agents who deliberately under-declare their taxes or facilitate their clients’ under-declaration of taxes.
All businesses, including individuals deriving income from their trade, profession or vocation, should closely monitor their income and regularly assess if they need to register for GST. If their past 12-month taxable turnover has exceeded $1 million at the end of any calendar quarter, they are required to apply for GST registration within 30 days.
From 2019, businesses will only need to monitor their taxable turnovers on a calendar year basis. 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.
IRAS regularly conducts audits to identify businesses that fail to register for GST. Over the past three years, IRAS has audited 400 businesses that have failed to register for GST and recovered $53 million in GST and penalties.
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. 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:
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