Director made false PIC claims
Alex Rajan made a false declaration in a PIC cash payout application form that EMTPL had purchased PIC automation equipment for $168,000 and that his company met the qualifying conditions for the cash payout.
IRAS’ investigations revealed that EMTPL did not incur such expenditure on the equipment. The company also did not employ or make CPF contributions for at least three local employees in the relevant period. In fact, EMTPL had never been in active business operation.
Mr Alex Rajan s/o Anthony Samy (“Alex Rajan”, 47), director of Exel Mitsui Technologies Pte Ltd (“EMTPL”) which manufactures machine tool accessories, was charged for making false PIC claims by the Courts on the 14 February 2014. Alex Rajan pleaded guilty to the charge and will be sentenced on 21 February for the offence. Meanwhile, the court has ordered EMTPL to pay a fine of $8,000 and a penalty of $180,000.
This is the second case of a director and its company to be charged for making false PIC claims. IRAS had earlier charged Greenit Pte Ltd, a computer equipment and hardware wholesaler and computer memory modules distributor, and its director Khoo Tzyh Shin for fraudulently claiming a PIC cash payout.
IRAS takes a serious view of any abuse of PIC Scheme
IRAS takes a serious view of taxpayers who defraud the government. Offenders convicted of PIC fraud will have to pay a penalty of up to four times the amount of cash payout fraudulently obtained, and a fine of up to $50,000 and/or imprisonment of up to five years.
Examples of what IRAS regards as abuse of the PIC scheme are as follows:
a) Claiming PIC using false records or documents, where no such expenditure was incurred or where the actual amount incurred was lower.
b) Creating a shell company to make PIC claims on purchase of equipment from a related company, where no such purchases were made and where the automation equipment continue to be owned and used by the related company.
c) Claiming PIC based on collusion with a third party to purchase automation equipment, when the selling party is not the legal owner of the equipment and was merely renting or leasing it.
d) Using phantom employees to meet the PIC qualifying condition of having made CPF contributions for three or more local employees.
e) Engaging in arrangements that seek to artificially inflate PIC claims such as purchase/lease arrangements bundled with non-qualifying costs (for example, offering a high cash back for trade-in of an old asset).
f) Artificially inflating the staff cost allocated to software development.