Latest News from Singapore Statutory Board
24 May 2012 - An Unusual Oversight
A local promoter and organiser of shows and other entertainment acts failed to ensure that its tax returns were accurate. Consequently, Unusual Entertainment Pte Ltd ("UEPL") was found guilty of wrongly stating the output tax in its Goods and Services Tax (GST) returns, resulting in an underpayment of $502,922.27 in GST. UEPL was ordered to pay a penalty of $601,632.72 and a fine of $10,000.
UEPL pleaded guilty to four charges of under-declaration of GST without reasonable excuse. Four remaining charges were taken into consideration for sentencing.
Wrong output tax amount submitted
GST-registered businesses must charge GST output tax on the sale of their goods and services at the prevailing GST rate.
IRAS' investigations revealed that UEPL had wrongly declared its output tax for 2005 and 2006. The discrepancy was noticed when IRAS investigators found that sales figures submitted by UEPL for income tax purposes did not tally with the sales figures reported for output tax for 2005 and 2006. Further checks revealed that UEPL had not included the GST collected on tickets sales for both years as output tax in its GST returns.
UEPL was aware that it was required to account for the GST on the tickets sales. Under the Ticket Sales Agreements signed with SISTIC1, it was clearly stated that the responsibility of accounting for GST on ticket sales lies with UEPL. However, UEPL failed to check the GST returns prepared by its tax agent, which resulted in incorrect tax returns. The total sales reported in the GST returns were much lower than the amount for ticket sales over the same period. For example, the sales revenue declared for 2005 income tax was $9,136,361.00, against the $2,810,668.00 declared as total sales in their GST returns in the same year. A comparison would have shown the vast difference between the two sets of figures (more than $6 million), when they should have been close, if not the same. Yet, the mistake went unnoticed as UEPL did not check its GST returns. As a result, UEPL had understated $502,922.27 of GST output tax.
UEPL also made similar under-declarations of output tax in other years. The total amount of tax and penalty involved is $983,859.90.
