Man who evaded taxes on over 1,800 imported vehicles gets S$6 million fine

SINGAPORE: A man was fined S$6 million (US$4.4 million) last Friday (Jan 19) for evading duty and Goods and Services Tax (GST) on 1,828 motor cars imported into Singapore.

Low Han Siang, the sole proprietor of car importer M’ Exclusive, has paid S$500. If he does not pay the rest, he will have to serve an additional jail term of 69 months in default.

He was also sentenced to nine months' jail for underpaying the Additional Registration Fee (ARF) during the registration of the vehicles.

The ARF is a tax imposed when a vehicle is registered, calculated based on a percentage of the Open Market Value of the vehicle. 

Low, 46, had pleaded guilty to two charges under the Customs Act for evading over S$1.8 million in taxes and duties incurred from importing 1,141 motor vehicles, including brands like Mercedes, Porsche and Tesla, into Singapore between 2017 and 2021. 

The Singaporean also pleaded guilty to two amalgamated charges of giving incorrect information under the Road Traffic Act.

Another two charges of fraudulent evasion of GST, six charges of fraudulent evasion of duty and GST, five charges of causing an incorrect declaration to be made and four amalgamated charges for giving incorrect information were taken into consideration during sentencing. 

HOW LOW WAS CAUGHT

An investigation into M’Exclusive was launched after the car importer was suspected of under-declaring the values of motor vehicles for assessment of duty and GST payable, Singapore Customs said in a press release on Monday.

Investigations found that from April 2017 to June 2021, Low created false invoices or asked his suppliers to issue multiple invoices with partial values to conceal the actual values of the imported cars.

These invoices were then submitted to Singapore Customs for assessment of duty and GST payable.

Low admitted that he had suppressed values in declaring the facts for motor vehicle assessments to pay less taxes to the government.

He used several methods to do this, including obtaining two invoices from his suppliers for the same car.

One of them would be the false invoice reflecting the suppressed value of the car, which Low would determine.

He also used blank invoice templates from his suppliers to create false invoices.

Low had also instructed his employee, Lee Pak How, to falsify invoices. 

Lee, a 33-year-old Singapore permanent resident, was fined S$10,000 on Jan 13 after pleading guilty to one charge of falsification of documents.

The suppression of the values of the 1,828 motor cars imported into Singapore between April 2017 and June 2021 resulted in the short payment of duty and GST amounting to about S$3,263,280.

The prosecutor for Singapore Customs sought a fine of S$7.1 million, with 72 months' jail in default, while the Land Transport Authority prosecutor sought a jail term of 36 to 40 weeks' jail.

Defence lawyer Victor David Lau from Drew & Napier said these sentences would be crushing.

Once Customs started investigations, Low was unable to on-sell any of his incoming supply and he forfeited multiple deposits with suppliers as he had to cancel their orders, said Mr Lau.

"This was for approximately 2,500 vehicles, and his estimated loss from this episode alone is in the region of S$5 million," said the lawyer.

Currently, Low covers his family's financial expenses by working at a friend's car dealership and through personal loans, Mr Lau said.

The lawyer added that car sales is an "immensely cashflow dependent business" and Low's inability to fulfil sales after investigations commenced meant that he was "quickly engulfed in debt".

UOB applied for Low to be made bankrupt in May 2022 and he was adjudged as bankrupt in July 2022. 

He not only has to cover his family's expenses, he also has to contribute the monthly sum of S$1,500 to the Official Assignee until 2027, said Mr Lau.

He flagged his client's remorse and cooperation with the authorities, adding that a crushing jail term would be debilitating not only to Low but also to his family, who will no longer have any source of income.

DECLARED VALUES OF IMPORTED MOTOR CARS

Singapore Customs said it “closely monitors" the declared values of motor cars imported into Singapore and "will not hesitate to take enforcement actions on errant traders”. 

The agency added it maintains a "robust commitment" to combat fraudulent evasion of duty and GST, and will take the necessary actions against individuals and entities engaging in such illicit activities.

Singapore Customs noted that in January, five individuals involving three separate cases were charged for fraudulent evasion of duty and GST by suppressing the declared values of imported motor cars, making incorrect declaration or causing incorrect declaration to be made on the values of motor vehicles, and falsification of documents.

Court proceedings are ongoing for these cases. 

“Any person who is concerned in fraudulent evasion of any duty or GST on imported goods shall be liable on conviction to a fine of up to 20 times the amount of duty and GST evaded and/or jailed for up to two years,” Singapore Customs said. 

Any person who is concerned in fraudulent evasion of any duty or GST on imported goods can face a maximum fine of up to 20 times the amount of duty and GST evaded and jailed for up to two years.

Any person who gives incorrect information in relation to any matter affecting the amount of tax chargeable shall be liable on conviction to a fine not exceeding S$10,000 or to imprisonment for a term not exceeding six months.

"The court shall also order the offender to pay up the ARF which has been undercharged to the LTA," Singapore Customs said. 

Editor's note: This article has been updated to correct the default jail term Low will have to serve if he does not pay the fine. We apologise for the error.