Khoo Chin Huat (“Khoo”), 66, sole-proprietor of Sin Metal Industries (“SMI”) has been sentenced by the Court to 54 weeks’ imprisonment and ordered to pay fines and penalties totalling $1,784,451, after being convicted of offences involving Goods and Services Tax (“GST”) evasion, Income Tax evasion and failure to keep proper business records (“Record-Keeping Offences”).

Investigations revealed that Khoo had poor record keeping habits and he arbitrarily adjusted downwards his GST payable figures from 2012 to 2016. For income tax reporting, he obtained his sales and purchase figures by totalling the false corresponding entries in his GST F5 Returns for the relevant Year of Assessment (“YA”). Despite a self-review request initiated by IRAS in 2017, Khoo continued to submit incorrect information to IRAS.

Court Sentences

For 7 counts of making false entries in his GST F5 returns between the quarter ended 31^st December 2012 and the quarter ended 31^st March 2016, with the wilful intent to evade tax, resulting in $176,106 of tax undercharged, Khoo was sentenced to 14 weeks’ imprisonment and ordered to pay $528,319 in penalties.

For 2 counts of making false entries in his Income Tax Returns for YA2013 to YA2014, with the wilful intent to evade tax, resulting in $417,044 of tax undercharged, he was sentenced to 40 weeks’ imprisonment and ordered to pay $1,251,132 in penalties.

Khoo also faced 1 count of failing to keep and retain tax invoices received by him for the business of SMI from its suppliers and vendors as required under the GST Act, in respect of each of the 20 quarters from the quarter ended 31^st March 2012 to the quarter ended 31^st December 2016. He also faced 1 count of failing to keep and retain invoices received by him for the business of SMI from its suppliers or vendors, in respect of each of the 5 YAs from YA 2013 to 2017, as required under the Income Tax Act. The court sentenced him to pay $5000 in fines for the Record-Keeping Offences.

IRAS' audit programme uncovered the offence

IRAS runs regular audit programmes across various industries to ensure tax compliance among individuals, businesses and the self-employed. To detect GST omissions, IRAS also conducts regular audits of GST-registered businesses. Using data analytics and advanced statistical tools, IRAS can cross-check data and detect anomalies. This case was uncovered through one such audit programme.

Keeping Proper Records

IRAS would like to remind all taxable persons to keep proper records and accounts of all their taxable transactions. Records pertaining to income tax must be retained for a period of 5 years from the relevant YA, while records pertaining to GST must be retained for a period of not less than 5 years from the prescribed accounting period. Those who fail to do so may be liable on conviction to a fine and/or a jail term.

Severe Penalties for Tax Evasion

IRAS takes a serious view of non-compliance and tax evasion. There will be severe penalties for those who wilfully evade tax. IRAS will not hesitate to bring offenders to court. For evasions related to Income Tax, offenders may face a penalty of up to four times the amount of tax evaded. Jail terms may also be imposed. For evasions related to GST, offenders may face a penalty of three times the amount of tax undercharged, a fine not exceeding $10,000, and/or imprisonment of up to seven years.

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 actions to be taken. Please refer to the IRAS website for more information on how to disclose past mistakes. Those who wish to report malpractices may make their submissions via this form.

Cash Rewards for Informants

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 will ensure that the identities of informants are kept strictly confidential.

Inland Revenue Authority of Singapore