56-year-old Mdm Ng Chiew Yen (“Ng”) and 26-year-old Tan Kai Wen, Keith (“Tan”) have been charged with giving false and misleading information to IRAS during IRAS’ audit of a 2-step “99-to-1” property purchase arrangement. This is the first prosecution involving taxpayers providing false and misleading information to IRAS during an audit of the 2-step “99-to-1” property transactions. Ng and Tan face five charges each.

Facts of the Case

This case is part of IRAS’ ongoing audit into the 2-step “99-to-1” property transactions for possible tax avoidance. Investigations in the subject case revealed that Tan had purchased a residential property in his sole name on 24 Sep 2021. Subsequently, Tan sold a one per cent share of the property to Ng. IRAS commenced an audit into the transactions in 2023.

During the audit, IRAS sought information from Tan via email concerning the transactions. Tan was asked why he did not jointly purchase the property with Ng at the outset. Tan allegedly falsely stated that:

-        He made a hasty decision to purchase the property with the understanding that his family would support him financially. 
-        His family was unable to do so subsequently and thus Ng had to be added as a joint owner in order to take a loan.

In addition, Tan allegedly provided misleading information to IRAS in the form of incomplete WhatsApp messages, as well as other false and misleading responses to IRAS during the audit.

Both Tan and Ng were handed 5 charges each for allegedly conspiring to provide the misleading information and responses to IRAS.

If convicted of providing false and misleading information, Tan and Ng could each be fined up to $10,000 or jailed for up to two years or both.

Offence Uncovered During IRAS’ Audit

IRAS conducts regular audits on taxpayers for property transactions to detect non-compliance and tax avoidance. The 2-step “99-to-1” audit is part of IRAS’ regular audits to uncover arrangements entered into for the purpose of reducing or avoiding stamp duty. Whether a case is deemed to be tax avoidance depends on the facts and circumstances of each case.

The 2-step “99-to-1” property purchase arrangements typically involve individuals without any prior property count buying residential properties in their name initially, and within a very short period of time, selling a small share of the property, such as one percent share to another individual who has a higher Additional Buyer’s Stamp Duty (ABSD) profile. By structuring the transaction in this manner, ABSD would be payable only on the one per cent share of the property, rather than on the full value of the property if the purchase was done jointly at the onset.

Should IRAS determine that tax avoidance has occurred, IRAS will recover the rightful amount of stamp duty from the buyers, and may impose a surcharge of 50 per cent of the additional duty payable. There is no statutory time limit for stamp duty audits.

When audited, individuals should cooperate and be upfront with IRAS. Providing false statements or misleading information (e.g. information that has been tampered with) is considered a criminal offence, carrying penalties such as fines and/or imprisonment, if convicted.

Voluntary Disclosure

Purchasers who entered into 2-step “99-to-1” property purchase arrangements should voluntarily disclose their arrangements to IRAS. Depending on the circumstances, IRAS is prepared to consider such cases more favorably. Please refer to the IRAS website for more information on voluntary disclosures.

Cash Rewards for Informants

A reward based on 15% of the tax recovered, capped at $100,000, will 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 Commissioner. IRAS will ensure that the identities of informants are kept strictly confidential. Those who wish to report malpractices may make their submissions via this form.

Inland Revenue Authority of Singapore