Man convicted in first case of attempted cheating of wage credit scheme jailed for five weeks

Chou Li Chen was sentenced to jail on Nov 3 for attempting to cheat the Inland Revenue Authority of a total of $66,678.
Chou Li Chen was sentenced to jail on Nov 3 for attempting to cheat the Inland Revenue Authority of a total of $66,678. ST PHOTO: WONG KWAI CHOW

SINGAPORE - The first man to be convicted of trying to cheat the taxman using the Wage Credit Scheme (WCS) began his five-week sentence on Thursday (Nov 9).

Businessman Chou Li Chen, 70, was sentenced to jail on Nov 3 for attempting to cheat Inland Revenue Authority (Iras) of a total of $66,678 under the WCS as part of an elaborate scheme. He had pleaded guilty to two of the four charges he faced.

The WCS was introduced in 2013 as a three-year scheme under which the Government co-funded 40 per cent of the wage increases of local employees earning a gross monthly wage of $4,000 and below. The current co-funding level is 20 per cent.

Chou had been earning just $491 a month from Interfam and Virtuality Art and Entertainment in his capacity as company secretary. But he tried to deceive Iras into believing that both these companies - as well as Assobuild and Cap Investment- had given him a personal wage increase of $41,674 each in the calendar year of 2013, something that he knew was not true. Using this device, he tried to get Iras to hand over $16,670 to each of the four companies under the WCS.

None of the companies had any employees other than Chou, and no genuine business activity and revenues in 2012 and 2013. With the sudden, purported wage spike, he appeared to go from earning $491 a month to $3,964 a month.

This meant that the company giving him the wage hike of $3,473 a month was entitled to receive an annual subsidy of 16,670 under WCS.

For each of the 12 months in 2012 and the first 11 months of 2013, both Interfam and Virtuality made monthly employer's CPF contributions of $19 per month into Chou's account, based on his monthly wage of $491.

In December 2013, Interfam contributed $4,849 - suggesting that his yearly salary had shot up by $41,674 a year.

Deputy Public Prosecutor Nicholas Lim Kah Hwee said given the suspicious nature of the wage increases, Iras did not disburse the subsidy to Interfam.

As part of his elaborate scheme, Chou even issued cheques from his personal bank account to the accounts of Interfam and Virtuality. Then, as company secretary of these companies, he would issue cheques back to himself as purported payments towards his outstanding wages.

Seeking a sentence of five to six weeks' jail last Friday, DPP Lim said cheating of government funds cannot be tolerated. He pointed out the large amount involved - $16,670 per charge - and the elaborate planning by Chou in committing the offences.

Chou could have been jailed for up to 18 months and/or fined for each charge.