RC Components Pte. Ltd. (“RC Components”) and its director, Chan Keng Chun, have been convicted of providing false information in RC Components’ Productivity and Innovation Credit (“PIC”) cash payout application form.

Facts of the Case

RC Components is a distributor of computer memory products and hardware accessories. Investigations revealed that RC Components submitted an application form dated 22 May 2012 to claim for a cash payout under the PIC scheme. RC Components declared in the application form that it had incurred $77,202 in time costs for five employees purportedly for developing software systems. There was, in fact, no such development of software systems and the five employees did not spend any time on development of software systems. A PIC cash payout of $23,160.60 would have been disbursed to RC Components if the false claim was not detected by IRAS.

Court Sentences

RC Components was charged and convicted of giving false information without reasonable excuse to the Comptroller of Income Tax to obtain the PIC cash payout, which it was not entitled to. The company was ordered by the court to pay a penalty of $46,321.20, which is two times the amount of the PIC cash payout that would have been wrongfully obtained, and a fine of $2,500.

Chan Keng Chun was charged and convicted of giving false information without reasonable excuse to the Comptroller of Income Tax to assist RC Components to obtain a PIC cash payout, which RC Components was not entitled to. He was ordered by the court to pay a penalty of $46,321.20, which is two times the amount of PIC cash payout that would have been wrongfully obtained, and a fine of $2,500.

Severe Penalties for Abusing PIC Scheme

IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the Government. Offenders convicted of PIC abuse will have to pay a penalty of up to four times the amount of PIC cash payout fraudulently obtained or which would have been obtained if the offence had not been detected, and a fine of up to $50,000 and/or imprisonment of up to five years.

Some of the areas of PIC abuse that IRAS has observed are:
1. Making PIC claims on fabricated or inflated expenditure,
2. Falsely listing friends, relatives and acquaintances as employees to meet
the 3 employees condition, and
3. Fabricating business revenue in order to falsely qualify for PIC claims.

To date, IRAS has prosecuted five PIC abuse cases. IRAS is also actively investigating into several cases of alleged PIC abuses.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken. Those who wish to disclose past mistakes or wish to report malpractices or potential abuses of the PIC scheme can write to:
Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987
Email: [email protected]

Inland Revenue Authority of Singapore