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SINGAPORE: On Friday (December 18), the director of a company that subcontracts electrical and metal works became the first to be convicted of giving a false statement to the Internal Revenue Authority of Singapore (IRAS) during its criminal investigations.
Law Yu Hong, the 53-year-old director of the Ho Sin company, was jailed for 10 days and fined S $ 5,000 for two charges under the Income Tax Law.
He will also have to pay a fine of S $ 38,400, double the amount of the cash payment he improperly obtained under the Productivity and Innovation Credit (PIC) scheme. The scheme, which was introduced in 2010, allows companies to obtain tax deductions and rebates on certain expenses.
Law admitted to contacting the mastermind behind the PIC scam, Ng Cheow Chai, who suggested a proposal to submit an inflated PIC claim to IRAS for a higher payment.
In this way, Law’s firm would not have to pay a single penny for a machine it wanted to buy from Ng, who was the managing director of SMS Machinery.
SMS Machinery issued an inflated invoice to the law firm for a price of S $ 80,000 for one machine, although the sale price was S $ 48,000.
Law then implemented an artificial refund arrangement so that SMS Machinery could repay 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 he was allegedly purchasing from Law’s firm.
Shortly after the law firm submitted the false PIC claim to IRAS in April 2016, the authority audited the claims and requested more information.
Law was summoned to the IRAS facility to make a statement of compliance with the law and was shown the false quote, invoice and delivery order under the reimbursement agreements.
Law lied that his company had supplied the materials to Adept Machinery, confirming in his statement that his company had supplied and manufactured the materials on machine tools and delivered them to Adept Machinery.
He denied that this was part of a repayment plan for Ng’s firm to return the excess 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 alleged materials.
Ng had received 46 months in jail and a fine of S $ 5.75 million in March this year for helping 83 companies file fraudulent claims under the PIC scheme.
IRAS said in a statement after the ruling 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 found 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.
