Man who evaded GST and duties on nearly 1,000 imported vehicles gets jail in default of S$3.6 million fine

SINGAPORE: Guilty of evading more than S$1 million (US$754,000) in taxes that he was supposed to pay for importing nearly 1,000 motor vehicles, a man was slapped with a S$3.6 million fine at the State Courts on Tuesday (Jan 2).

As he failed to pay the fine, Tan Lye Khim, 47, the sole proprietor of car importer Smartcar Auto, will serve 43 months' jail instead, the Singapore Customs and the Land Transport Authority (LTA) said in a joint statement.

Tan, who is Singaporean, was also sentenced to an additional seven weeks’ imprisonment for underpaying the Additional Registration Fee (ARF) during the registration of the vehicles.

In total, he will be jailed for almost 45 months.

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

Tan had pleaded guilty to evading over S$1 million in taxes and duties incurred from importing the motor vehicles into Singapore between 2018 and 2020. This includes: 

• Fraudulent evasion of duty amounting to about S$769,207 for the imports of 974 motor vehicles
• Another two charges of fraudulent evasion of Goods and Services Tax (GST) amounting to about S$323,067 involving the same motor vehicles
• Two charges of fraudulent evasion of duty and GST for the imports of nine vehicles, with a total evaded amount of about S$6,092

The authorities said that Tan also pleaded guilty to one charge of giving incorrect information under the Road Traffic Act in relation to the value of 746 motor vehicles.

Two more charges for giving incorrect information under the Road Traffic Act in relation to the values of 228 motor vehicles and nine motor vehicles respectively were taken into consideration during sentencing.

"The incorrect information resulted in a shortfall of S$5,190,893 of ARF," said the authorities. 

HOW HE WAS CAUGHT

Singapore Customs had launched an investigation into Smartcar after suspecting the values of motor vehicles submitted to Singapore Customs for assessment of duty and GST payable were "intentionally understated", authorities said. 

These investigations revealed that in 2016, Tan was allegedly engaged by a 43-year-old Singaporean man and a 48-year-old male Singapore permanent resident to set up an entity, later known as Smartcar, to import motor vehicles.

However, Smartcar was a "front company" for the two men who had engaged Tan, with one of them managing Smartcar’s daily operations.

In setting up the entity, Tan would be paid S$5,000 a month, in addition to an annual lump sum payment ranging from S$100,000 to S$225,000 for his role.

"Tan was aware that Smartcar was set up to import motor vehicles with suppressed values to evade duty and GST," said authorities. 

Other than Tan, the statement said that a 31-year-old female Singapore permanent resident was also employed by Smartcar. She allegedly assisted in placing orders and liaising with overseas suppliers, making payments to suppliers, preparing and submitting motor vehicle values imported through Smartcar to Singapore Customs for assessment.

Court proceedings against the 43-year-old male Singaporean and the woman are ongoing, while the authorities are still investigating the 48-year-old male Singapore permanent resident, said Singapore Customs and LTA. 

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 amount of tax (ARF) which has been undercharged to the LTA," the authorities added. 

This article was originally published in TODAY.