Subcontracting firm director first to be convicted of giving false statement to IRAS, jailed 10 days
SINGAPORE: The director of a firm that subcontracts electrical and metal works on Friday (Dec 18) became the first to be convicted of giving a false statement to the Inland Revenue Authority of Singapore (IRAS) during its criminal investigations.
Law Yu Hong, the 53-year-old director of the company, Ho Sin, was jailed for 10 days and fined S$5,000 for two counts under the Income Tax Act.
He will also have to pay a penalty of S$38,400 - twice the amount of the cash payout he wrongfully obtained under the Productivity and Innovation Credit (PIC) scheme. The scheme, which was introduced in 2010, allows businesses to get tax deductions and allowances on certain expenses.
Law admitted contacting the mastermind of the PIC scam - Ng Cheow Chai, who suggested a proposal to submit an inflated PIC claim to IRAS to get a higher payout.
In this way, Law's firm would not have to pay a single cent for a machine it wanted to buy from Ng, who was the managing director of SMS Machinery.
SMS Machinery issued an inflated invoice to Law's firm for a price of S$80,000 for a machine, even though the selling price was S$48,000.
Law then implemented an artificial pay-back arrangement so that SMS Machinery could return the amount overpaid by Law's firm. Ng did so by using Adept Machinery - another business he had control of - to issue a false purchase order for materials worth S$34,240 that it was purportedly buying from Law's firm.
Shortly after Law's firm submitted the false PIC claim to IRAS in April 2016, the authority audited the claims and requested more information.
Law was summoned to IRAS' premises to give a statement under law and shown the false quotation, invoice and delivery order under the pay-back arrangements.
Law lied that his company had supplied the materials to Adept Machinery, confirming in his statement that his company had supplied and fabricated the materials into machine tools and delivered them to Adept Machinery.
He denied that this was part of a pay-back scheme for Ng's firm to return the surplus cash paid by Law's firm as a result of an inflated PIC claim.
Law later admitted that he had lied and confirmed that his company had not supplied the purported materials.
Ng had been given 46 months' jail and a S$5.75 million penalty in March this year for helping 83 businesses submit fraudulent claims under the PIC scheme.
IRAS said in a statement after the sentencing that it takes a very serious view of anyone who intentionally provides false or misleading information to IRAS or who attempts to defraud the Government.
Anyone guilty of giving false information to IRAS faces a jail term of up to two years, a fine of up to S$10,000, or both.