Mr Seah Boon Huat, 56 years old, director of Project Building Construction (Pte) Ltd (“Project Building Construction”), was charged under Section 96A of the Income Tax Act and convicted for assisting the company to evade tax amounting to $265,483.48 for Years of Assessment 2004 and 2005.

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 who is convicted for an offence under this section may be liable to pay a penalty of 4 times the amount of tax evaded, a fine of not exceeding $50,000 or to an imprisonment for a term not exceeding 5 years or both. Mr Seah is the first individual to be charged and convicted under this section.

The company, which is in the business of building construction, was also charged under Section 96A and convicted for tax evasion for the Years of Assessment 2004 and 2005. It is the second company to be charged under this section.

Modus Operandi

Investigations revealed that Mr Seah Boon Huat had created fictitious invoices to inflate the expenses paid to the sub-contractors by the company for the Years of Assessment 2000 to 2005. He also forged the signatures of the sub-contractors by acknowledging receipt of payment supposedly made to the subcontractors by the company.

The inflated expenses amounted to $1,664,200 for the Years of Assessment 2000 to 2005, resulting in tax undercharged of $361,691.84. The company has since paid the tax undercharged to the Comptroller of Income Tax.

Court Sentences

This morning, Mr Seah Boon Huat and Project Building Construction pleaded guilty to 2 of the 6 charges. The remaining 4 charges were taken into consideration for the purpose of sentencing. For the 2 charges, the Court

1. Sentenced Mr Seah Boon Huat to 6 months’ imprisonment for the 1st charge and 2 months’ imprisonment for the 2nd charge, with sentences to run consecutively. Total imprisonment is 8 months.
2. Ordered Mr Seah Boon Huat to pay a penalty of 4 times the amount of tax undercharged of $265,483.48 in respect of the 2 charges, which amounted to $1,061,933.92. In default of payment of the penalty, the default sentence would be 9 months of imprisonment for the 1st charge and 1 month of imprisonment for the 2nd charge.
3. Sentenced Project Building Construction to pay a fine of $50,000 for the first charge and $10,000 for the second charge. Ordered Project Building Construction to pay a penalty of 4 times the amount of tax undercharged of $265,483.48 in respect of the 2 charges, which amounted to $1,061,933.92.

Voluntary Disclosure

Taxpayers are encouraged to conduct periodic reviews of their income tax returns/declarations and disclose any error voluntarily. While IRAS believes the majority of taxpayers are compliant, some taxpayers could have been negligent or unaware of their tax obligations, thus resulting in mistakes.

To encourage taxpayers to disclose errors or omissions and to come forward voluntarily in a timely manner, IRAS has reduced the penalty under its Voluntary Disclosure Programme for voluntary disclosures which meet qualifying conditions. The qualifying conditions and further details are listed in IRAS’ e-Tax Guide on “IRAS Voluntary Disclosure Programme”, which is available at www.iras.gov.sg.

Members of the public may report malpractices

While IRAS believes the vast majority of taxpayers are law-abiding and contribute their fair share of taxes, strong deterrent action will be taken against those who wilfully understate their income, even if the amount evaded is small. Those who assist others to defraud the government by falsifying records that result in under-declaration of income will also be penalised.

Taxpayers who wish to disclose errors made by them in their past income tax returns or anyone who wishes to report malpractices that might indicate tax evasion may write to IRAS at the following addresses:

Email: [email protected]
Address: Investigation & Forensics Division,
55 Newton Road,
Singapore 307987

IRAS would ensure that the identities of informants are kept confidential.

Issued by Inland Revenue Authority of Singapore