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A nightclub operator was sentenced to jail for more than 13 months and fined S$630,861 after being found guilty of evading goods and services tax (GST) and money-laundering.

Soon Kok Khoon, the operator of Club Posh Entertainment and West Palace Entertainment was found to have helped the clubs make false entries in their GST returns “with wilful intent" to evade the tax.

Modus operandi

In 2016, Soon had instructed the clubs’ accountants to omit reporting sales revenue of the clubs, which were mainly from the sale of flower-garlands, and the output tax.

The GST-registered clubs provided flower garlands, which are taxable supplies, to the customers who would pay for them.

The flower garlands were then delivered to performing artistes identified by the customers.

The flower garlands ranged from S$50 to S$100,000.

Two shell entities

For customers who chose to pay via credit card, Soon instructed his staff to swipe their cards on the point-of-sale terminals linked to two other shell entities that were not GST-registered.

These shell entities were not GST-registered and had no actual business activities.

Monies collected through credit cards or cash for the flower garlands were not deposited in the clubs' bank accounts.

No receipts were issued by the clubs for such sales and they were not recorded in the clubs' accounts.

Revenue amounts and the GST output tax of the supplies of the flower garlands were omitted from the clubs' GST returns even though such supplies were taxable supplies.

As the flower garlands were "charged" to the point-of-sale terminals of two shells entities, Soon instructed his staff to falsely record these taxable supplies as "sale of souvenirs" of the two shell entities.

Taking his evasion a step further, Soon instructed his staff to understate the "sale of souvenirs" in the accounting books of the two shell entities to avoid hitting the GST registration threshold.

By doing so, Soon had thereby disguised monies which represented the benefits of his criminal conduct from GST evasion.

Penalties

For three counts of GST evasion involving S$210,287 of tax undercharged, Soon was sentenced to 34 weeks' imprisonment, and ordered to pay a penalty of S$630,861.

The fine is three times the GST amount he evaded.

Five other GST evasion charges were taken into consideration for this sentencing.

For three counts of money-laundering involving the disguise of property amounting to S$3,214,389, Soon was sentenced to six months’ imprisonment.

Five other money-laundering charges were taken into consideration for this sentencing.

Those who are found guilty of wilfully submitting false GST returns by overstating any input tax, understating any output tax or including fictitious transactions could be penalised three times the amount of tax undercharged, fined no more than S$10,000 and/or jailed for up to seven years.

Anyone who acquires, possesses, uses, conceals or transfers benefits from criminal conduct could be fined up to S$500,000, jailed up to 10 years, or both, if convicted.

The authorities encouraged businesses or individuals to immediately disclose any past tax mistakes, adding that the Inland Revenue Authority of Singapore (IRAS) will treat such disclosures as mitigating factors when considering actions to be taken.

All photos via IRAS