Singapore Tax Authorities Recovered 35 million

In 2017, there were cases 243 cases investigated and this accounts for more than double compared to 2016. Tax evasion is a serious offence in Singapore, and in cases of serious tax crimes, IRAS performs on premise raids and arrest on tax evaders. A total of 60 to 70 raids are carried out in a year. 

With the aid of data analytics, it is becoming easier for tax authorities to be more aware of activities of business and transactions. Activities such as inflating Goods and Services refunds, falsification on transactions, PIC misuse and setting up of shell companies.

In a recent case involving an eatery, investigators with Iras vest infiltrated into their office gathering the business physical and electronic records. The operation was conducted across the restaurant home, workplace and supplier simultaneously. During the 4 hours operation, ledgers, smartphones, and laptops were seized in the process. A total of 70 boxes and 15 bags of accounting records were seized as well.

Some of the Cases in Singapore
One of the high profile case of tax evasion in Singapore was by Chwee Guan Paper Sticks & Candles Trading Co, where the profits were under-declared  and the GST amount was understated. This resulted in a penalty of $2.3 million of penalties as well as imprisonment for the offence. Another case would be Kay Lee Roast which was fined over $329k and were jailed for 4 weeks under the court for tax evasion.

Tax Evasion versus Non Compliant
It was also indicated by IRAS that evasion is commonly found in businesses with substantial cash transactions, poor internal controls and the absence of proper record keeping. In 2017, there was a total of 10,726 cases if non-compliant cases. Surprisingly, omission do commonly occur among the self employed individuals like doctors, lawyers housing agents and insurance agents as this is due to knowledge in the area of proper record keeping and documentation. Another group that are commonly know for mistakes and omissions are family run businesses where many of times record keeping is done in house or internally. However, it is noted that all cases that are investigated does not necessary lead to prosecution. It is entirely based on the facts of the situation and at times, warnings or a lower composition charge may be imposed.

Penalties and Possible Outcomes
In Asia, Singapore has one of the lowest rates on corporate and personal tax in the world. However, being fair to those that are meeting their tax obligations, the government enforces upon non compliant taxpayers in Singapore. In terms of monetary compensation, this would be up to four times the amount that was undercharged. Tax evasion is seen as a form of criminal office and is taken seriously, those found guilty on acts of evasion may result in imprisonment not exceeding 5 years.

Record Keeping and 5 Years Time Frame
Businesses are individuals are still within the jurisdiction of the tax authorities for a period of 5 years from the point of transaction, so any records that are not kept properly could result in being non compliant and in some cases seen as a form of tax evasion. As such, it is important to maintain proper records of transactions and activities. Knowing your tax obligations and safeguarding your interest is key, in staying afloat and away from the tax authorities.

Posted on July 19, 2018 by Stephan Yeong

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