Boss of Social Escort Agency Jailed for Tax Evasion and PIC Fraud
Chew Tiong Wei, 38, a sole-proprietor of a social escort business, has been convicted of tax evasion and PIC fraud.
Investigations by the Inland Revenue Authority of Singapore (IRAS) and the Singapore Police Force (SPF) have led to the prosecution of Chew Tiong Wei for both vice-related and tax-related offences. He pleaded guilty on 7 Dec 2015 to two charges of wilfully omitting income of $275,685 in his Income Tax Returns for Years of Assessment (“YAs”) 2012 and 2013, thereby evading $26,964.65 in income tax. He also pleaded guilty to one charge of submitting false information in order to obtain a Productivity and Innovation Credit (PIC) cash payout and PIC bonus of $24,000.
Facts of the Case
Chew Tiong Wei, who operated the social escort agency involving underage escorts, was first arrested by the SPF for vice-related offences in Dec 2014. He was subsequently found to have evaded income tax by under-declaring his income from his online escort business for Years of Assessment (YA) 2012 and 2013.
Investigations revealed that Chew Tiong Wei had kept proper business earnings records. However, he had with wilful intent to evade tax, made false entries in his Income Tax Returns. He used fictitious figures to report his income and this resulted in under-declaration of $275,685 of business income for two years, with $26,964.65 of tax undercharged.
| Calendar Year | Year 2011 | Year 2012 | Total ($) | |
|---|---|---|---|---|
| Year of Assessment ("YA") | YA 2012 | YA 2013 | ||
| Actual Net Profit | 175,779.00 | 160,417.00 | 336,196.00 | |
| Less: Net profit declared in tax returns | 40,166.00 | 20,345.00 | 60,511.00 | |
| Omission of income | 135,613.00 | 140,072.00 | 275,685.00 | |
| Additional Tax Payable | 15,118.25 | 11,846.40 | 26,964.65 |
Chew Tiong Wei had also submitted a PIC cash payout application for the purchase of a Customers Relationship Management System by giving false information to meet the qualifying conditions for the cash payout.
IRAS’ investigations revealed that the business did not fulfil the condition of employing three local employees - the three persons named as his employees were in fact his father, mother, and wife who had never worked for his business. To make his claim appear legitimate, he made CPF contributions to their CPF accounts.
Court Sentences
Chew Tiong Wei was sentenced to 6 months’ jail for each charge of tax evasion, and was ordered to pay a total penalty of $80,893.95, three times the amount of tax evaded.
He was also ordered by the Court to pay a penalty of $72,000, three times the PIC cash payout of $24,000 that he had wrongfully obtained, and sentenced to 6 months’ jail.
IRAS Warns Against Tax Evasion
IRAS works closely with other law enforcement agencies and participates in multiagency task forces to fight against serious tax crimes. The authority will not hesitate to bring tax offenders to court for their crimes.
Penalties for tax evasion can be up to four times the amount of tax evaded. In certain situations, jail terms may also be imposed.
Severe Penalties for Abusing the PIC Scheme
Offenders convicted of PIC fraud will have to pay a penalty of up to four times the amount of cash payout fraudulently obtained, and a fine of up to $50,000 and/or imprisonment of up to five years.
Reporting of Malpractices
Businesses that wish to report malpractices or potential abuses of the scheme can write to:
Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987
Email: [email protected]
Cash Rewards for Informant
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 would ensure that the identities of informants are kept strictly confidential.