SINGAPORE - Two brothers, who own a business in Ghim Moh popularly known as Ah Seng Durian, have been found guilty of not paying taxes, including not registering for Goods and Services Tax (GST) when their revenue exceeded $1 million.
Shui Poh Sing, 60, and Shui Poh Chung, 57, had under-declared their income by about $708,000 for six years. As a result, they failed to pay an additional $161,604.62 to the taxman.
On Friday (May 3), the younger Shui was fined $10,000 and ordered to pay a penalty of $46,303.14 by District Judge Adam Nakhoda, who allowed the penalty to be paid in instalments over six months.
His older brother will be sentenced on May 7, with the prosecution asking for a jail term of between four to eight weeks and a fine of between $5,000 and $7,000, along with the requisite penalties.
Although the siblings shared the business profits equally, the older brother is the managing partner and in charge of the accounts and record keeping of the business.
They had inherited minimart Shanghai Moh Lee Seng from their father who died in 1999. On Feb 20, 2012, it ceased operating and they moved the business operations to Seng Chung Trading, also known as Ah Seng Durian, that they had set up.
Senior tax prosecutor Patrick Nai, from the Inland Revenue Authority of Singapore (Iras), told the court the undeclared income earned from the sale of durians by Seng Chung Trading was used to finance the mortgage payments for the brothers' respective properties in Malaysia.
Also, Shanghai Moh Lee Seng's turnover crossed the $1 million threshold for GST registration on Dec 31, 2006, Mr Nai said.
Under the GST Act, the older Shui was required to notify the Comptroller of GST and register the business for GST by Jan 31 the following year. He failed to do so.
In mitigation, their lawyer Vinit Chhabra said there was a mix-up which could be attributed to the brothers using one single bank account for both their private and business matters.
Income went into the account and payments went out, without a fixed method of keeping track.
He added that the older Shui handled the accounting work of the business, despite having no training in accountancy. And this could have led to some lapses.
The older Shui took up the task when their last accountant retired after the death of their father, the lawyer told the court.
But after investigations into their tax offences commenced in 2014, the two brothers have engaged a professional accountant the following year to ensure their books are in order, Mr Vinit said.
He also said they had no previous previous run-ins with the law and were very remorseful for what they did.
Iras stressed on Friday its serious stance on non-compliance and tax evasion, saying there will be severe penalties for those who wilfully evade tax.
"Taxpayers are ultimately responsible for the information declared in their income tax returns," it said in a media statement.
"Penalties for tax evasion can be up to four times the amount of tax evaded. Jail terms may also be imposed."
Iras also said there are cash rewards for informants if their information leads to a recovery of tax that would otherwise have been lost.
The reward is based on 15 per cent of the tax recovered, capped at $100,000, and handed out at the discretion of the Comptroller. The identities of informants are also kept strictly confidential.