Xing Wang Ji Roasted Meat Wholesale Pte Ltd (“Xing Wang Ji”; 兴旺記烧肉批发私人有限公司) was convicted in Court today for failing to declare sales income amounting to approximately $3.5 million in its Income Tax Returns for Years of Assessment (“YAs”) 2005 to 2007, and for understating output tax totalling more than $220,000 in its GST returns. One of its directors, Peh Tian Poh (白添宝), was also convicted of assisting Xing Wang Ji to evade tax.

The court ordered Xing Wang Ji to pay a fine of $42,000. Peh Tian Poh was sentenced to 6 weeks’ jail and ordered to pay a total of $354,961.76 in taxes and penalty. 
 
Company Collaborated with Customers Who Wished to Avoid Paying GST

Xing Wang Ji was a GST-registered business in the supply of roasted and barbecued meats. It had to charge and account for GST on the supply of its products. However, Xing Wang Ji allowed customers who had specifically expressed their intention not to pay GST, to avoid GST payment on their purchases.

Investigations revealed that Xing Wang Ji had issued two types of sales invoices - standard sales invoices as well as non-standard sales invoices. The latter omitted essential particulars such as the company name and address, GST-registration number as well as the amount of GST collected. The non-standard sales invoices were issued when Xing Wang Ji’s customers expressed that they did not wish to pay GST for their purchases. These sales were recorded separately in exercise books, which were discovered during investigations. Only partial sales records (excluding the sales evidenced by the non-standard sales invoices) were handed to Xing Wang Ji’s part-time bookkeeper for the preparation of accounts to be submitted to IRAS.

Peh Tian Poh, who was responsible for issuing some of the non-standard invoices to Xing Wang Ji’s customers, was involved in making records of sales transactions in the exercise books, mainly during the Chinese New Year period and the Chinese Seventh Lunar Month Festival. He was one of the directors who omitted the non-standard invoices when giving the sales records to the part-time bookkeeper. IRAS is reviewing the appropriate action to be taken against the other director who was involved in the tax evasion.

Evasion of Income Tax and GST

Consequently, Xing Wang Ji failed to report the correct income earned from the sales of roasted and barbecued meats in its Income Tax Returns for YAs 2005 to 2007. This resulted in under-reporting of income totalling approximately $3.5 million for Xing Wang Ji and correspondingly, income tax undercharged of $110,600 for the three YAs.

As a result of the deliberate omission of information submitted to the part-time bookkeeper, Xing Wang Ji failed to correctly report output tax for the omitted sales of Xing Wang Ji. GST-registered businesses can offset the GST they pay for their purchases (input tax) against the GST they collect from sales (output tax) and pay the net difference to IRAS. In this case, Xing Wang Ji had understated the output tax due by $223,335.13, and the resultant amount of GST undercharged was $152,901.97.

IRAS Warns Against Tax Evasion

IRAS takes a serious view of taxpayers who do not comply with the need to submit proper income tax returns or have a wilful intent to evade tax. Taxpayers are also ultimately responsible for the information declared in their income tax returns and businesses are reminded to comply with GST registration rules, failing which the Authority will not hesitate to bring offenders to court. Penalties for tax evasion can be up to four times the amount of tax evaded. In certain situations, jail terms may also be imposed.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past tax mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken. Those who wish to disclose past mistakes, reveal evaded taxes, or report malpractices that might indicate tax evasion, 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.

Inland Revenue Authority of Singapore