Latest News from Singapore Statutory Board


26 May 2011 - Specialist eye consultant and surgeon convicted for tax evasion

Doctor Chiang Currie, 55, a specialist eye consultant and eye surgeon was jailed for six months and ordered to pay a penalty of $117,888.30 for under-declaring income tax amounting to $149,591.00 in her tax returns for the Years of Assessment (YA) 2006 and 2007.

Doctor Chiang was convicted for one charge under Section 96A and one charge under Section 96 of the Income Tax Act. A third charge was withdrawn and compounded.

Section 96A was enacted in 2003 to deter serious tax evasion such as preparation or maintenance of false books of accounts or other records. A person convicted under this section may be liable to pay a penalty of four times the amount of tax evaded, and a fine of up to $50,000 or a jail term of up to five years or both.

Doctor Chiang owns and operates International Eye Clinic (“IEC”), and keeps records of the business operations using a computer program. Investigations revealed that she instructed her staff to download the actual income records of IEC onto a portable hard-disk daily, and would delete some payment records of her patients from the hard-disk, in particular those that were transacted in cash terms. The file with the incomplete payment records were then uploaded onto the office’s desktop computer. She based her tax reporting on the incomplete payment records and consequently under-declared her business income for 2006 and 2007. For the two charges, the total tax evaded amounted to $29,529.30.

6 May 2011 - Sole proprietor jailed for under-reporting profits

Mr Ng Choon Tat Henry (“Ng”), 54, was jailed for 3 weeks and ordered to pay a penalty of $941,169.96, three times the taxes evaded, for under-reporting profits of Full Skil Wire Cut Services (FSWC) amounting to $1,457,059 for the Years of Assessment (YA) 2000 to 2002. In default of payment, he would be sentenced to 4 months’ jail.

FSWC was in the business of designing and manufacturing of tools, dies and moulds as well as metal stamping. Ng was the sole proprietor of FSWC from 1 April 1994 to 20 July 2004.

Investigations revealed that Ng had deliberately under-reported his income in his income tax returns for YA 2000, 2001 and 2002 by overstating the cost of sales so as to reduce the net profits of his business. Ng pleaded guilty to two charges of tax evasion. As Ng was cooperative during the investigation, the third charge was taken into consideration in sentencing. The total tax evaded for the two charges amounted to $313,723.32.

04 March 2011 - Second Company Convicted of Abusing Tax Exemption Scheme

Global Marine Boiler and Engineering Pte Ltd (GMBE) was convicted of tax evasion for under-reporting profits amounting to $780,152 for the Year of Assessment (YA) 2008. GMBE was ordered to pay a penalty of $421,282.08 and a fine of $8,000.

GMBE supplies, manufactures and repairs marine equipment and engines. It is the second company to be convicted in court for evading tax through abuse of tax exemption scheme for new start-ups under section 43(6A) of the Income Tax Act. In Oct 2009, Steel Forming & Rolling Specialists Pte Ltd (SFRS) became the first company to be convicted for abusing the tax exemption scheme.

Investigations revealed that GMBE set up 4 shell companies in Dec 2006 for purpose of abusing the tax exemption scheme for new start-ups. The 4 companies had no employees except for the directors themselves. There was no work or services performed by the 4 companies for GMBE. Nevertheless, GMBE included fictitious expenses amounting to $780,152 in its audited statements of accounts for the year 2007, purportedly as management fees, commission, labour and service charges paid to the 4 shell companies.

Although the 4 companies had reported their income based on the fees purportedly charged to them, each company paid a negligible amount of tax. This is because the first $100,000 of their chargeable income was exempted from tax under the tax exemption scheme. Through setting up 4 shell companies and including fictitious expenses in its accounts, GMBE had artificially lowered its profits by $780,152 and evaded income tax of $140,427 for the YA 2008.

IRAS has detected cases where shell companies have been used to take advantage of the tax exemption scheme for new start-ups. These companies have no business activities and have few or no employees. Their accounts usually show relatively few transactions and low capitalisation.

The abuse of the tax exemption generally takes the following forms:
a) Allocating the income of a profitable company to a few shell companies.
b) Charging fees or expenses to an existing profitable business without any bona fide commercial reasons.
The effect of these forms of arrangement is an overall reduction of tax for the profitable company and the shell companies.

11 Feb 2011 - First CPA charged for assisting company to evade tax

Mr Ong Boon Lee (“Ong”), 48, is the first certified public accountant (CPA) to be charged for assisting a company, Darma Consultants Pte Ltd (“Darma”), to evade income tax.

Darma, which is in the business of supplying engineers to oilfield companies, was convicted for claiming fictitious expenses and under-reporting its profits in the income tax returns for the Years of Assessment (YA) 2005 and 2006. Darma was ordered to pay a penalty totalling $37,096, three times the amount of tax undercharged, and a fine of $6,000 for the two offences. In addition, five other similar offences committed during 2000 to 2004 have been compounded by the Comptroller of Income Tax.

Ong, who owns Benedict & Associates, allegedly helped Darma set up a shell company in British Virgin Islands (BVI). As Darma’s accountant, Ong then allegedly falsified expenses of $86,528 in Darma’s income tax returns for the Years of Assessment 2005 and 2006, purportedly as payments made to the shell company in BVI. The total amount of tax undercharged was $12,365.

IRAS has developed the capability to detect and uncover sophisticated tax fraud even in cases involving offshore companies. “We use a variety of specialised computer forensic tools and techniques to uncover evidence in our investigation. Our officers’ experience in detecting sophisticated fraud activities and expertise in forensic accounting also played a big part in helping to unravel the case.” says Wilson Ong, Assistant Commissioner, Investigation and Forensics Division.

Errant Tax Agents
Under the tax laws, a person who assists anyone to evade tax by falsifying any books of account or records or by use of any fraud is liable to a penalty of up to 4 times the amount of tax evaded, a fine of not exceeding $50,000 or to imprisonment for a term not exceeding 5 years or both.

In general, IRAS takes a serious view of such offences by errant tax agents. Tax agents have extensive knowledge and understanding of tax laws and are responsible for giving tax advice to help taxpayers fulfil their tax obligations. IRAS believes that majority of them perform their duties professionally. IRAS will not hesitate to take harsh actions against those who help their clients evade taxes or abuse the tax system.