Director of used car dealership ordered to pay penalty of over S$1 million for understating income tax returns

SINGAPORE — The director of a used car dealership here was ordered by the State Courts on Friday (July 17) to pay over S$1 million in penalty and fined S$5,000 for abetting his company to understate its tax returns between 2011 and 2013.

Low Soon Leong, 50, a company director of BW Automobiles, was charged with abetting his company to understate over S$6 million in the company’s income tax returns for the years of assessment 2011 to 2013.

In a media statement, the Inland Revenue Authority of Singapore (Iras) said that the company had declared a total of only S$1.24 million of income in its tax returns over those three years.

Court documents stated that Low made major decisions for BW Automobiles, such as on the purchase of used cars as well as setting the reserve selling price of these cars.

The company has two branches — one in Sin Ming and the other in East Coast — with the main income for the business coming from the profits from the sale of the used cars, as well as insurance commission, loan commission and administrative fees.

Investigations by the authorities revealed that Low was the director who signed the company’s tax returns. In doing so, he was to declare that the return gives a full and true account of the whole of the income of the company for the preceding year, court documents showed.

Investigations found that Low did not look carefully at the company’s financial statements given to him by an accountant and did not check the revenue figures but had accepted all the figures on the tax returns prepared by the company’s tax agent.

Investigations showed that the total amount of income understated over the three years was S$6,011,142 with the total tax undercharged amounting to S$1,017,029. For the year of assessment 2013, rental income of S$153,423 was also omitted from the tax return, court documents showed.

Iras said that of the three charges levelled against Low, the prosecution proceeded with one charge against him for abetting the company to omit income from its tax returns without reasonable excuse, with the remaining two charges being taken into consideration during sentencing.

Low was ordered by the court to pay a penalty of S$1,006,122, which is two times the tax undercharged, and a fine of S$5,000.

Low has since made full restitution of the over S$1 million undercharged.

In its statement, Iras said that it takes a serious view of non-compliance and tax evasion.

“There will be severe penalties for those who wilfully evade tax. Taxpayers are responsible for the information declared in their income tax returns. The authority will not hesitate to bring offenders to court,” Iras said.

“Penalties for tax evasion can be up to four times the amount of tax evaded. In certain situations, jail terms may also be imposed.”