A 47-year-old man who tried to defraud a government productivity scheme and helped others to submit false claims under the same scheme was handed a $5.75 million penalty and jailed for nearly four years yesterday.
Ng Cheow Chai, who runs two machinery companies, helped 83 businesses submit fraudulent claims to the Productivity and Innovation Credit (PIC) scheme between March 2013 and July 2016, seeking payouts of $2.7 million they were not entitled to, the Inland Revenue Authority of Singapore (Iras) said.
On Feb 10, Ng pleaded guilty to 57 income tax charges involving more than $1.4 million in cash payouts and bonuses.
The court sentenced Ng to 46 months in jail and ordered him to pay a penalty of $5.75 million, four times the amount of the payouts which he wrongfully obtained.
If he cannot pay this penalty, Ng will serve an additional 311/2 months in jail.
This is the largest penalty and jail term given for PIC fraud.
A total of 116 other similar charges linked to the remaining amount were taken into consideration during sentencing.
The PIC scheme was introduced to encourage productivity enhancements in businesses. It offers tax deductions or cash payouts to companies that have invested to enhance productivity and innovation - via staff training, information technology or automation equipment.
The scheme ended in 2018.
Ng used his position as director of SMS Machinery, which sells wholesale machinery, and the president partner of Adept Machinery, which trades, maintains and repairs used and re-conditioned machines, to perform tax fraud.
Both companies are located at Senoko Way in Sembawang.
In order to falsely claim higher PIC cash payouts for his clients, he told his staff to write up false invoices which, in some charges, inflated the price of the product sold.
The clients would pay SMS the inflated amount stated in the false invoice. SMS would afterwards refund or pay back the difference between the inflated amount and the actual amount through Ng's other company, Adept Machinery.
In other cases, Ng authorised SMS staff to prepare false records and tax invoices to clients showing the sales of SMS machinery when in fact there were no such sales. This was to maximise the clients' PIC cash payouts and to sell SMS machines to PIC claimants without claimants having to pay any money.
Using this sales tactic, SMS sold 182 machines, in relation to the 173 charges, which amounted to $11.2 million. Of this amount, $4.7 million was inflated.
Under the Income Tax Act, those found guilty of showing intent to assist another person to obtain a PIC cash payout or bonus, or a higher amount of PIC cash payout or bonus, must pay a penalty that is four times the amount of PIC cash payout or bonus made, or the amount that would have been made if they had not been caught.
From Jan 1, offenders convicted of registrable tax offences will have their convictions reflected in their criminal records.
Separately, Ng was also charged yesterday with money laundering, which was taken into consideration in his sentencing.