A husband-and-wife team behind the popular Kay Lee Roast Meat Joint was convicted of tax evasion, under-declaring more than $325,000 in sales.
The two counts of tax evasion, made in 2010 and 2011, amounted to $54,917.15, said the Inland Revenue Authority of Singapore (Iras) yesterday.
Ha Wai Kay, 64, who was registered as the sole proprietor of Kay Lee, was found guilty of evading income taxes, and his wife, Kong Kuee Chin, 69, was convicted of helping him.
Both Ha and Kong were sentenced to four weeks' jail and had to pay a penalty of $164,751.45 each.
The couple built the roast meat business from scratch. Since their two children did not want to continue the business, they sold it for $4 million in 2014 - $500,000 above their original asking price - to conglomerate Aztech Group.
Aztech Group said the couple is no longer involved in the business, having handed over the reins several months after the sale.
Tax evasion cases in F&B industry
This is not the first time a food business has got into trouble for under-declaring earnings.
In 2007, Looi San Cheng, who sold his Tip Top curry puffs from his Ang Mo Kio stall, became the first hawker here to be jailed for tax evasion.
He made $1.06 million over six years but declared profits of only $2,800 between 2001 and 2006. He was jailed for two weeks and fined $196,000. Four other charges against him were withdrawn after he paid another $291,000 to compound them.
In 2008, food supplier Ong Guan Hwa, who under-declared his partnership income from Hup Lee Frozen Food in 2004 and 2005, was jailed for two weeks and penalised $86,890.
Two years ago, Xing Wang Ji Roasted Meat Wholesale was convicted of failing to declare sales income of about $3.5 million between 2005 and 2007, and for under-declaring output tax totalling more than $220,000 in its GST returns. The company was fined $42,000.
One of the directors was jailed six weeks and ordered to pay about $355,000 in taxes and penalty.
Mr Jeremy Mun, 41, Aztech's senior vice-president and head of marketing, told The Straits Times he was unaware of the tax evasion, which happened "way before we took over the business".
He did not see the case as having an impact on Kay Lee's business.
Since the publicly listed Aztech took over the business, it has expanded the Kay Lee brand to seven branches in Singapore.
"Customers go for the taste of the food and this tax evasion is an individual act prior to our taking over the business," he said. "I think customers still enjoy the food and I doubt this will affect the branding."
According to Iras, Kong, who was listed as the sole proprietor of Wan Tat Eating House, was responsible for recording sales amounts for both Kay Lee and Wan Tat.
She would then provide a total monthly sales income figure to the couple's accountant, who helped prepare their statement of accounts and income tax returns.
Iras' investigations showed that Kong knowingly provided figures to the accountant that were lower than Kay Lee's actual total sales income.
For 2011, she said sales income was $531,924, when it was actually $693,839. The next year, she gave a figure of $665,413 instead of the actual $829,335 sales income.
Ha was responsible for approving the income tax return that the accountant would submit to Iras.
But he falsely declared that the tax figures were correct despite knowing his wife had provided false figures for Kay Lee's sales income, said Iras. As a result, Ha was charged $54,917.15 less on income tax than he should have been for those two years.
In the financial year 2014/15, Iras uncovered a total of 12,866 non-compliant cases and recovered more than $457 million in taxes and penalties.
•Additional reporting by Annabeth Leow