SINGAPORE — Guilty of evading more than S$1 million in taxes that he was supposed to pay for importing nearly 1,000 motor vehicles, a man was ordered to pay a S$3.6 million fine on Tuesday (Jan 2).

For failing to pay the fine, Tan Lye Khim, 47, the Singaporean sole proprietor of car importer Smartcar Auto, will serve 43 months' jail instead.

The Singapore Customs and the Land Transport Authority (LTA) said in a joint statement that Tan was also sentenced to an extra seven weeks’ jail for underpaying the Additional Registration Fee (ARF) during the registration of the vehicles.

In total, his jail sentence is almost 45 months. 

The ARF is a tax imposed when a vehicle is registered, calculated based on a percentage of the open market value of the vehicle.

Tan had pleaded guilty to evading more than S$1 million in taxes and duties incurred from importing the vehicles into Singapore between 2018 and 2020. This includes: 

• Fraudulent evasion of duty amounting to about S$769,207 for the imports of 974 vehicles
• Another two charges of fraudulent evasion of Goods and Services Tax (GST) amounting to about S$323,067 involving the same motor vehicles
• two charges of fraudulent evasion of duty and GST for the imports of nine vehicles, with a total evaded amount of about S$6,092

The authorities said that Tan also pleaded guilty to a charge of giving incorrect information under the Road Traffic Act in relation to the value of 746 vehicles.

Two more charges of giving incorrect information under of the Road Traffic Act in relation to the values of 228 vehicles and nine vehicles respectively were taken into consideration during sentencing.

"The incorrect information resulted in a shortfall of S$5,190,893 of ARF," the authorities said. 

HOW HE WAS CAUGHT

Singapore Customs had launched an investigation into Smartcar after suspecting that the values of motor vehicles submitted to it for assessment of duty and GST payable were "intentionally understated", the authorities said. 

These investigations revealed that in 2016, Tan was allegedly engaged by a 43-year-old Singaporean man and a 48-year-old male Singapore permanent resident to set up an entity, later known as Smartcar, to import motor vehicles.

However, Smartcar was a "front company" for the two men who had engaged Tan, with one of them managing the firm's daily operations.

In setting up the entity, Tan would be paid S$5,000 a month, in addition to a yearly lump-sum payment ranging from S$100,000 to S$225,000 for his role. 

"Tan was aware that Smartcar was set up to import motor vehicles with suppressed values to evade duty and GST," the authorities said. 

Other than Tan, a 31-year-old female Singapore permanent resident was also employed by Smartcar. She allegedly assisted in placing orders and liaising with overseas suppliers, making payments to them, and preparing and submitting vehicle values imported through Smartcar to Singapore Customs for assessment.

Court proceedings against the woman and 43-year-old man are ongoing, while the authorities are still investigating the 48-year-old man.

Any person who is concerned in fraudulent evasion of any duty or GST on imported goods can face a maximum fine of up to 20 times the amount of duty and GST evaded and be jailed for up to two years.

For giving incorrect information in relation to any matter affecting the amount of tax chargeable, the penalty is a fine not exceeding S$10,000 or a jail term of up to six months.

"The court shall also order the offender to pay up the amount of tax (ARF), which has been undercharged to the LTA," the authorities added.