First company convicted of abusing tax exemption

27 October 2009 - Steel Forming and Rolling Specialists Pte Ltd (“SFRS”) was the first company in Singapore convicted of tax evasion by making false entries in its income tax returns.The total amount of profits under-reported was $1,356,000.  The company’s managing director, Mr Gan Oh Boon was also convicted of his role in assisting the company to evade tax.

The Court

i) Sentenced SFRS to a fine of $24,000 and ordered it to pay a penalty of $988,933.58. 

ii) Sentenced Mr Gan Oh Boon to a total of 2 weeks of imprisonment and a total fine of $8,000.  In default of payment of the fine, the default sentence would be 6 weeks of imprisonment. He was also ordered to pay a total penalty of $988,933.58. In default of payment of penalty, the total default sentence would be 34 months of imprisonment.

SFRS's auditor, also acting as its tax agent, Mr Chng Chor Tong is the first practicing certified public accountant in Singapore to be convicted of tax evasion.  He was sentenced to 6 month’s jail and ordered to pay a penalty of $75,200.52. In addition, he paid $200,000 for compounding his offence of abetting one of his clients in the commission of a tax offence.

Our comments:

While a lot of SMEs believe in using the auditor as their tax agent, a line of independence drawn between the person auditing the accounts and the person preparing the tax returns will ensure that there is a strong deterrent action to wilfully understate income, even if the amount of evasion is small. 

At AscentiaTax, we provide you with that safety net so that you will not act in the wrong side of law when tax matters are concerned.

Click here to read media release of this case from the Inland Revenue Authority of Singapore.