Tax Evasion Leads to a S$50,000 Fine for a Company Director

Summary of the Facts

Kong Ming Jie, a company director in Singapore, was fined S$50,000 under the Customs Act for evading Goods and Services Tax (GST), which constitutes tax evasion in Singapore. This offense stemmed from undervaluing imported goods, specifically a shipment of LED flashlights and accessories.

Additionally, Jie committed a breach under the Customs Act by not maintaining documents related to these imports, further implicating him in tax evasion in Singapore.

The defendant, a director of Nitecore Singapore, pleaded guilty to five charges related to tax evasion in Singapore. The court also took into consideration an additional six offenses in his sentencing.

What are the Penalties?

Fraudulently involving oneself in or attempting tax evasion in Singapore, can lead to fines up to 20 times the amount of duty or GST evaded.

Deliberately making a false, incorrect, or incomplete declaration can result in penalties of up to 12 months of jail time, a fine of up to S$10,000, or the equivalent amount in duty or tax owed, whichever is greater, or both combined.

In Singapore, tax evasion also involves failing to retain proper documentation and records relating to the importation of goods. Violating this aspect of the Goods and Services Tax Act can lead to a jail sentence of up to three years, a fine of up to S$10,000, or both penalties together.

The Offences

In August 2019, a notable incident of tax evasion in Singapore was uncovered when officers inspected a shipment of LED flashlights and accessories at Changi Airfreight Centre, correlating with goods imported by Nitecore Singapore.

For one of the shipments, the declared value of the goods was misleadingly low at less than S$400, when the actual value surpassed S$23,300. This understatement led to the evasion of due GST to the tune of S$1,633.55, as reported by Singapore Customs.

In another instance, the shipment was inaccurately valued at S$402.57, throwing off the actual cost of S$8,495.62. Such miscalculations resulted in a shortfall in the GST payment of S$563.41.

Further problematic activities highlighted by the agency indicated incorrect declarations of value for a shipment of monoculars and optical telescopes.

According to Singapore Customs, similar attempts at tax evasion in Singapore were made on seven various occasions between January and August 2019.

Additional offences were revealed when the defendant was asked to provide documentation related to his company’s imported goods. The director of Nitecore Singapore admitted to not retaining any import-related trade documents, thus violating the Goods and Services Tax Act.

What are the GST Rules?

In Singapore, goods (excluding alcohol and liquor) imported by post or air are given relief from GST provided their value does not exceed S$400.

Understatement of import values, as in this case, leads to non-payment of GST for the shipment, thus contributing to tax evasion in Singapore as stated by Singapore Customs.

What was the total that Kong Ming Jie had evaded in GST?

In this instance of tax evasion in Singapore, Kong Ming Jie, director of Nitecore Singapore, successfully evaded a total of S$9,051 in GST. He was penalized S$50,000 for his offenses.

This incident serves as a stern reminder for companies to adhere strictly to tax regulations in Singapore.