14 individuals who allegedly made false Productivity and Innovation Credit (“PIC”) claims will be charged in court on Friday, 17 Feb 2017. These individuals had registered sole-proprietorships, partnerships or companies and used them to make false claims. Their PIC claims amounting to $334,464 were made between 2013 and 2014.   

Investigations by the Inland Revenue Authority of Singapore (IRAS) have revealed that the PIC claims were linked to S. Chandran, who was charged in court on 27 Jan 2017 for assisting 49 claimants to fraudulently obtain PIC cash payouts and PIC bonuses.   

IRAS will take appropriate legal action against the claimants based on the facts and circumstances of each case. This may include prosecution or other enforcement actions such as issuance of warning letters.  

Artificial arrangements to abuse the PIC Scheme

The PIC scheme was introduced to encourage productivity and innovation activities in Singapore. It is meant for businesses which have made genuine investments to enhance productivity and innovation. However, there are instances where claimants, who have neither incurred qualifying expenditure nor made actual investment to enhance productivity and innovation, have abused the PIC scheme by entering into artificial arrangements with third parties such as vendors in order to make false PIC claims.  

Typically in such scenarios, claimants will enter into artificial arrangements with vendors to give the impression that they had incurred the expenditures for which their PIC claims are based. They may also submit the names and particulars of persons who are not their employees just for the purpose of representing to IRAS that they have met the PIC scheme’s condition of employing three local employees.   

Severe Penalties for Abusing PIC Scheme

IRAS takes a serious view of any attempt by claimants, vendors or promoters who abuse the PIC scheme and defraud the Government. In particular, IRAS will take stern action against promoters who facilitate offences committed against the PIC schemes. Anyone who commits PIC offences might be subject to penalties of up to four times the amount of PIC cash payout and PIC bonus fraudulently obtained (or which would have been obtained if the offence had not been detected), and a fine of up to $50,000 or imprisonment of up to five years.  

Reporting of Malpractices

Businesses or individuals are encouraged to immediately report to IRAS any past or current malpractices or potential abuses of the PIC scheme. Reports can be made to:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987

Email: [email protected]

Inland Revenue Authority of Singapore