Tax loopholes in SG that allow the cunning to CHEAT on personal income taxes.

I find your reference to Bible verse as "abrahamic fairytales" rather annoying.

BirdbrainZ said:

I find your constant references to abrahamic fairytales rather annoying. Instead of flaunting semi-poetic religious references & verses, perhaps it might be best if you work on keeping your posts articulated and to the point.

This isn't the first time I have commented on your posting style.

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Hi BirdbrainZ,
I find your reference to Bible verse as "abrahamic fairytales" rather annoying.

Instead of policing the internet for religious references & verses, perhaps it might be best if you were aware that by the CONSTITUTION OF THE REPUBLIC OF SINGAPORE [link],
15. —(1) Every person has the right to profess and practise his religion and to propagate it.
(The main qualification being that: )
(4) This Article does not authorise any act contrary to any general law relating to public order, public health or morality.

Indeed work is being done to keep posts articulated and to the point.

"This isn't the first time I have commented on your posting style", and whist it mightn't be the last, kindly keep your extreme paranoid neurosis against all things religious under wraps as the resulting religious denigration that you spew is certainly quite offensive, dangerous or divisive if not unconstitutional to say the least.

Please "Don't panic", just don't be so uptight can?

Quote(s):
"If you want a love message to be heard, it has got to be sent out. To keep a lamp burning, we have to keep putting oil in it".- Mother Teresa.

To BirdbrainZ: And what substance do you currently have bolster this assertion?

BirdbrainZ said:

Not only that, technically the "loophole" cherry6 brought up isn't a real loophole since there are penalties in place (enforced by law and liable to lawsuits) should such frauds be detected and/or reported.

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And what substance do you currently have bolster this assertion?
I see none in this thread so far.

BirdbrainZ said:

Not only that, technically the "loophole" cherry6 brought up isn't a real loophole since there are penalties in place (enforced by law and liable to lawsuits) should such frauds be detected and/or reported.

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which is even full of even moar win!!

as much I detest the rich (damn them! why them and not me?) and their tax evasion ways... if they can manage to pay as little tax as possible without having the taxman do an extensive audit on their books then I would have to say LLST...

it is THEIR fault that most governments now resort to using VAT to get revenue. The rich can avoid paying estate taxes, income taxes and other taxes but they NEED to eat, drink and enjoy their wealth. There is no escape from VAT so long as they need to satisfy their urges.

cherry6 said:

And what substance do you currently have bolster this assertion?
I see none so far i this thread.

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now now, no need to get testy...

he can't stop you from quoting from the bible or whichever holy book you wish. he can talk about it and you can still continue.

Change, like I often say does not happen automatically.

cherry6 said:

And what substance do you currently have bolster this assertion?
I see none in this thread so far.

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The substance you seek has been given by another user on a different forum at the link #1 and the source of which has also been provided in link #2.

1. http://buses.sgforums.com/forums/10/topics/423349?page=1

2. http://www.iras.gov.sg/irasHome/page03a.aspx?id=8010#Abuse_of_Tax_Exemption_Scheme_for_New_Companies

iras.gov.sg said:

Abuse of Tax Exemption Scheme for New Companies

IRAS has observed a number of cases where shell companies have been used to take advantage of the tax exemption scheme for new start-ups and not for genuine commercial reasons.

These shell companies do not carry out any activities or significant activities and have no employee or few employees. Their accounts usually show relatively few transactions and low capitalisation (usually at $2).

The abuse of the tax exemption scheme generally takes the following forms:

a. Allocating the income of an existing profitable going concern to a few shell companies so that the chargeable income of each shell company is within the threshold for tax exemption; or

b. Charging fees/ expenses to an existing profitable going concern by shell companies without any bona fide commercial reasons. The shell companies claim the tax exemption on the income they receive from the profitable going concern, while the latter claims tax deduction on the fees/expenses paid to the shell companies.


The effect of these forms of arrangement is an overall net reduction of tax for the profitable going concern and the shell companies.

Tax evasion/fraud is a criminal offence punishable under the law and the Court imposes severe penalties for such offences <-- (Link). Businesses or individuals who engage in abusive tax arrangements such as setting up shell companies to take advantage of the tax exemption scheme for new start-ups, or individuals who assist others with abusive tax arrangements should disclose such abuse immediately. IRAS will treat such disclosure as a mitigating factor when considering the penal charges.

Those who wish to make a voluntary disclosure should contact:

Corporate Tax Division
Inland Revenue Authority of Singapore
55 Newton Rd, Revenue House
Singapore 307987

Click to expand...

cherry6 said:

Hi BirdbrainZ,
I find your reference to Bible verse as "abrahamic fairytales" rather annoying.

Instead of policing the internet for religious references & verses, perhaps it might be best if you were aware that by the CONSTITUTION OF THE REPUBLIC OF SINGAPORE [link],
15. —(1) Every person has the right to profess and practise his religion and to propagate it.
(The main qualification being that: )
(4) This Article does not authorise any act contrary to any general law relating to public order, public health or morality.

Indeed work is being done to keep posts articulated and to the point.

"This isn't the first time I have commented on your posting style", and whist it mightn't be the last, kindly keep your extreme paranoid neurosis against all things religious under wraps as the resulting religious denigration that you spew is certainly quite offensive, dangerous or divisive if not unconstitutional to say the least.

Please "Don't panic", just don't be so uptight can?

Quote(s):
"If you want a love message to be heard, it has got to be sent out. To keep a lamp burning, we have to keep putting oil in it".- Mother Teresa.

Click to expand...

I am not surprised that my advise to you to keep your posts articulated and to the point have been misunderstood. The point I wished to highlight to you is that the inclusion of these abrahamic verses and references neither add to nor enhance the topic at hand. Does your thread topic suffer from the lack of reference to such content? The answer here is No, it does not.

On your annoyance of me calling the abrahamic stories as fairytales. I will cite the exact portion of the Singapore Constitution right back at you. But to dwell on this portion of my comments does not work to your advantage nor education of the subject at hand. The primary reason is found in my first paragraph in this post and in my earlier response to you. Take it however you wish.

".. the Singapore government is no friend of the poor nor the honest as it creates more and more .."

BirdbrainZ said:

Re: To BirdbrainZ: And what substance do you currently have bolster this assertion?
The substance you seek has been given by another user on a different forum at the link #1 and the source of which has also been provided in link #2.
1. http://buses.sgforums.com/forums/10/topics/423349?page=1
2. http://www.iras.gov.sg/irasHome/page03a.aspx?id=8010#Abuse_of_Tax_Exemption_Scheme_for_New_Companies

iras.gov.sg said:

Abuse of Tax Exemption Scheme for New Companies
IRAS has observed a number of cases where shell companies have been used to take advantage of the tax exemption scheme for new start-ups and not for genuine commercial reasons.

These shell companies do not carry out any activities or significant activities and have no employee or few employees. Their accounts usually show relatively few transactions and low capitalisation (usually at $2).
...
Tax evasion/fraud is a criminal offence punishable under the law and the Court imposes severe penalties for such offences <-- (Link). ...

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Thanks for your research in substantiating your claim, do note however that the IRAS link for Court imposes severe penalties for such offences is blind ending (a general site for all "Media Releases/ Speeches") suggesting poor effort/ haplessness on the side of IRAS.

In respect of the relatively rare prosecution, it is the case of blatant abuse wherein even the paperwork is fictitious: 'Company convicted for abuse of tax exemption scheme for Singapore start ups' (July 15,2010) where "Alphalog claimed fictitious expenses amounting to $1.2 million as management fees paid to VEPL when no such services had been performed by VEPL."

Firstly, I would like to remind you that "According to Singapore Companies Act, any person (foreign or local) above the age of 18 can register a Singapore company", your reference puts their worth at beginning from $2.

I thus stand by my assertion that in my original example, IRAS would have difficulty prosecuting Mr X even if they had picked him up for investigation.
He may very well claim that his intention of creating so many companies is bonafide- to distinguish between nuances in his consultancy services, as well as (ridiculous as it might sound) in preparation for his eventual demise- for the convenience of estate division purposes amongst his harem of wives and mistresses.

In any case, and as first mentioned, it is "Zero tax for new Singapore companies on the first 100K annual profits for the first 3 years".

How much in terms of resources shall IRAS expand in persecuting the clown?

Does IRAS depend on mainly scare tactics to enforce its harebrained taxation laws?
But for such harebrained policies, would such tactics of evasion have even arisen in the first place?

My point remains, that it is ridiculous and unwise for IRAS to grant companies (aka a 'persona ficta') GREATER tax concessions then they do to real human beings (aka your average Singaporean). My contention is that the MOF did this (corp tax rt. 17%) merely as a flimsy trick to con foreign businesses into investing in Singapore, only to feel betrayed by a relatively less attractive personal income tax regime (top rt= 20%).

Unlike a company, a person has an identity that cannot be easily changed or replaced, as such, greater respect in terms of both rights and freedoms need be accorded to real people rather then 'persona ficta(s)'.

In short, the Singapore government is no friend of the poor nor the honest as it creates more and more flawed laws, stop gap, band aid measures towards 'growing' its economy. An arbitrary one wherein gambling is considered a valid and respectable occupation.

- 'Legal personality': [wiki]: "Legal personality (also artificial personality, juridical personalty, and juristic personality) is the characteristic of a non-human entity regarded by law to have the status of a person. A legal person (Latin: persona ficta), (also artificial person, juridical person, juristic person, and body corporate, also commonly called a vehicle) has a legal name and has rights, protections, privileges, responsibilities, and liabilities under law, just as natural persons (humans) do. The concept of legal personality is perhaps one of the most fundamental legal fictions. It is pertinent to the philosophy of law, as well as corporations law (the law of business associations)."

"I will cite the exact portion of the Singapore Constitution right back..".. Go ahead, please do...

BirdbrainZ (21-02-2011 said:

cherry6 (21-02-2011 said:

...
Instead of policing the internet for religious references & verses, perhaps it might be best if you were aware that by the CONSTITUTION OF THE REPUBLIC OF SINGAPORE [link],
15. —(1) Every person has the right to profess and practise his religion and to propagate it.
(The main qualification being that: )
(4) This Article does not authorise any act contrary to any general law relating to public order, public health or morality.
...

Click to expand...

I am not surprised that my advise to you to keep your posts articulated and to the point have been misunderstood. The point I wished to highlight to you is that the inclusion of these abrahamic verses and references neither add to nor enhance the topic at hand. Does your thread topic suffer from the lack of reference to such content? The answer here is No, it does not.

On your annoyance of me calling the abrahamic stories as fairytales. I will cite the exact portion of the Singapore Constitution right back at you. But to dwell on this portion of my comments does not work to your advantage nor education of the subject at hand. The primary reason is found in my first paragraph in this post and in my earlier response to you. Take it however you wish.

Click to expand...

"I will cite the exact portion of the Singapore Constitution right back at you".
Go ahead, please do, be my guest.
CONSTITUTION OF THE REPUBLIC OF SINGAPORE, Section 15 in part has already been quoted as you have quoted, and you are free to add relevant detail.

Please note that I do not otherwise appreciate blind assertions.

cherry6, your logic is beyond comprehension. Only for the richest of rich will have a situation where their personal income text be more expensive than company tax. For these people, they could try but IRAS tracks their taxes carefully. Furthermore, corporate tax is a flat system while personal tax is progressive, which means for most people (even high fliers), personal income tax makes much more sense. To use your example again, someone who earns $650K PA will be paying $108K in personal income taxes, while companies will pay $110K in taxes.

Even if its the other way around what is the savings of $2K to someone who earns $60+K a month? If it is their own company, most people won't pay themselves that much. They would rather live off their company. If they work for some MNCs, they don't do these things.

And instead of bitching here like a broken soundtrack, you can perhaps suggest on how to legislate this. On how I see it is very simple. The laws are designed for most law abiding companies who should make use of this taxation laws for valid reasons. It is not surprsing for people to have 4-5 companies. With valid reasons, and these might not be shell companies.

rich people are evil and they should donate all their wealth....

to me...

Inix: Do U hold private interest in supporting such harebrained MOF/ IRAS policies that allow the ..

Inix (21-02-2011 said:

Re:Tax loopholes in SG that allow the cunning to CHEAT on personal income taxes.

cherry6 said:

Inix: "I suggest you actually research or have a look at whats going on outside in the world ..."
Psst, you have misread my response as I have NOT touched upon the issue of capital gains from business mainly derived elsewhere (i.e. in another country).
...
This discussion pertains to the Singapore tax loophole of allowing zero personal income tax liabilities through the ('mis')use shell companies and the legitimate abuse of their associated generous corporate tax exemptions. A gaping loophole that at current, the Government of Singapore, in its blind pursuit of wealth through the celebration of such 'persona ficta(s)' has embarrassed itself with. Having elevated corporate rights and privileges to a stature in excess of what real human beings are accorded, the Singapore government now has the problem of individuals misusing such 'persona ficta(s)' for their own selfish gain.
...

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cherry6, your logic is beyond comprehension. Only for the richest of rich will have a situation where their personal income text be more expensive than company tax. For these people, they could try but IRAS tracks their taxes carefully. Furthermore, corporate tax is a flat system while personal tax is progressive, which means for most people (even high fliers), personal income tax makes much more sense. To use your example again, someone who earns $650K PA will be paying $108K in personal income taxes, while companies will pay $110K in taxes.

Click to expand...

"corporate tax is a flat system": as I've mentioned in my first post, there is "Zero tax for new Singapore companies on the first 100K annual profits for the first 3 years"- in that sense, corporate tax is even MORE progressive then personal income taxes. Tell me, where in our personal income tax regime does one enjoy ZERO taxes for the first $100k, not to mention discounted rates for all up to $300k of profits?!!!

In my example, Mr X should have paid $114.7k (YA2010) personal income tax had he not exploited the corporate 'multiple persona ficta' route to tax declaration- wherein he totally excused himself from taxes in respect of the $680k he 'earned' in say 2009.

His defense is in my post [#27] and excerpted as follows:

cherry6 (21-02-2011 said:

...
I thus stand by my assertion that in my original example, IRAS would have difficulty prosecuting Mr X even if they had picked him up for investigation.
He may very well claim that his intention of creating so many companies is bonafide- to distinguish between nuances in his consultancy services, as well as (ridiculous as it might sound) in preparation for his eventual demise- for the convenience of estate division purposes amongst his harem of wives and mistresses.
...

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PS: for consistency of discussion, kindly use tax rates for YA2010 (i.e. income earned 2009).

Inix (21-02-2011 said:

Even if its the other way around what is the savings of $2K to someone who earns $60+K a month? If it is their own company, most people won't pay themselves that much. They would rather live off their company. If they work for some MNCs, they don't do these things.

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"They would rather live off their company": I believe that beside the personal example provided for by 'blacklotus' I have already replied to you about the dangers of "live off their company" in my post at 20-02-2011, 09:51 PM.
Ref blacklotus:

blacklotus (20-02-2011 said:

Yup. That's how my relatives got caught. Their lifestyle were too opulent. Can we say million dollar weekend (red plate) sports cars for the whole family and kids...family cars are just a cheapish top end BMW 7 series, a Merc 600SL and a Bentley. Their house has a service lift in it...4 stories, or is it 5 (is an attic considered a floor?)
Apparently, some business competitor/associate/enemy/friend with green eyes reported them to IRAS...

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Inix (21-02-2011 said:

And instead of bitching here like a broken soundtrack, you can perhaps suggest on how to legislate this. On how I see it is very simple. The laws are designed for most law abiding companies who should make use of this taxation laws for valid reasons. It is not surprsing for people to have 4-5 companies. With valid reasons, and these might not be shell companies.

Click to expand...

As I've mentioned, Mr X has managed to totally evade personal income taxes of $114.7k on an earned income of $680k p.a. with none much that IRAS can do, itself having provide such a gaping loophole- a result of myopic policy making.
Inix: do U hold private interest in supporting such harebrained MOF/ IRAS policies that allow the rich to unjustly prosper?

Definitions:
- 'Legal personality': [wiki]: "Legal personality (also artificial personality, juridical personalty, and juristic personality) is the characteristic of a non-human entity regarded by law to have the status of a person. A legal person (Latin: persona ficta), (also artificial person, juridical person, juristic person, and body corporate, also commonly called a vehicle) has a legal name and has rights, protections, privileges, responsibilities, and liabilities under law, just as natural persons (humans) do. The concept of legal personality is perhaps one of the most fundamental legal fictions. It is pertinent to the philosophy of law, as well as corporations law (the law of business associations)."

Yawn. If you can't win by facts, you attack the person. I'm happy that you actually think I'm worth 600+K. I actually hope I'm worth 10M though. Anyhow, I'm not interested to waste my time on your ludicrous examples, so this will be the last post.

Finally, I don't know how and why blacklotus's family get caught, but people who live off their company often does it quietly without any issues. I can give plenty of legal examples, but to do that would be a waste of my time considering that you would turn around and say its morally wrong anyway.

There are lots of loopholes waiting for people to explore and enjoy.Especially those rich one will be smart enough to explore out.Why?Because they will try any means to get more.

even CPF also has loopholes.

that is very bias!
ur assuming poor ppl are not smart!!!

cherry6 said:

Thanks for your research in substantiating your claim, do note however that the IRAS link for Court imposes severe penalties for such offences is blind ending (a general site for all "Media Releases/ Speeches") suggesting poor effort/ haplessness on the side of IRAS.

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What I have posted here in reply to your request for "substance" is neither a claim nor an assertion. It is merely a presentation of the awareness of the issue & measures that are in place to deal with cases of tax evasions that are/have been discovered or reported to IRAS. If you have put in sufficient effort in researching this subject you would likely have found them too.

In link above, you will find articles that have been published segregated into different years (2011, 2010, 2009, etc), of which lies within several cases of tax evasion committed via fraudulent means and them having been dealt with in accordance to the law and penalities handed out. Although, the means by which these tax evasions are committed (that were published in the articles) in the nature of your thread topic are (perhaps) few, it is something that has not eluded IRAS from what I am able to tell.

Q1: Have tax evasions of this nature been observed, discovered by and reported to IRAS?
A1: Yes.

Q2: Has something been done and/or put into effect to discourage these forms of fraudulent cases?
A2: Yes.

Q3: Will they (measures & penalties) be entirely effective and foolproof?
A3: No. But that does not mean that these sort of crimes are condoned, nor does it mean improvements to the current measures & penalties will not be *sought .

cherry6 said:

Please note that I do not otherwise appreciate blind assertions.

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What assertion(s) did I make?

An ad hominem attack. ?!?!?!?!?

Inix said:

cherry6 (21-02-2011 said:

...
Inix: do U hold private interest in supporting such harebrained MOF/ IRAS policies that allow the rich to unjustly prosper?
...

Click to expand...

Yawn. If you can't win by facts, you attack the person. I'm happy that you actually think I'm worth 600+K. I actually hope I'm worth 10M though. Anyhow, I'm not interested to waste my time on your ludicrous examples, so this will be the last post.
...

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"If you can't win by facts, you attack the person":
An ad hominem attack?!?!?!?!

BirdbrainZ (21-02-2011 said:

...
In link above, you will find articles that have been published segregated into different years (2011, 2010, 2009, etc), of which lies within several cases of tax evasion committed via fraudulent means and them having been dealt with in accordance to the law and penalities handed out. Although, the means by which these tax evasions are committed (that were published in the articles) in the nature of your thread topic are (perhaps) few, it is something that has not eluded IRAS from what I am able to tell...

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As U please.

BirdbrainZ: "What assertion(s) did I make?"

BirdbrainZ (21-02-2011 said:

cherry6 (21-02-2011 said:

BirdbrainZ (21-02-2011 said:

cherry6 (21-02-2011 said:

...
Instead of policing the internet for religious references & verses, perhaps it might be best if you were aware that by the CONSTITUTION OF THE REPUBLIC OF SINGAPORE [link],
15. —(1) Every person has the right to profess and practise his religion and to propagate it.
(The main qualification being that: )
(4) This Article does not authorise any act contrary to any general law relating to public order, public health or morality.
...

Click to expand...

...
On your annoyance of me calling the abrahamic stories as fairytales. I will cite the exact portion of the Singapore Constitution right back at you. ...

Click to expand...

"I will cite the exact portion of the Singapore Constitution right back at you".
Go ahead, please do, be my guest.
CONSTITUTION OF THE REPUBLIC OF SINGAPORE, Section 15 in part has already been quoted as you have quoted, and you are free to add relevant detail.
Please note that I do not otherwise appreciate blind assertions.

Click to expand...

What assertion(s) did I make?

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"What assertion(s) did I make?": Please dear, tell me which part of the Singapore constitution permits you to annoy me (and if not the entire religion of Islam) by your "calling the abrahamic stories as fairytales"

cherry6 said:

"What assertion(s) did I make?": Please dear, tell me which part of the Singapore constitution permits you to annoy me (and if not the entire religion of Islam) by your "calling the abrahamic stories as fairytales"

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Good grief. Read post #26 in it's entirety, and not cherrypick a sentence from within to chase.

Article 15 of the Singapore Constitution states as follows.

statutes.agc.gov.sg said:

Freedom of religion

15. —(1) Every person has the right to profess and practise his religion and to propagate it.

(2) No person shall be compelled to pay any tax the proceeds of which are specially allocated in whole or in part for the purposes of a religion other than his own.

(3) Every religious group has the right —

(a) to manage its own religious affairs;

(b) to establish and maintain institutions for religious or charitable purposes; and

(c) to acquire and own property and hold and administer it in accordance with law.

(4) This Article does not authorise any act contrary to any general law relating to public order, public health or morality.

Click to expand...

Me citing the *article right back at you, is to remind you that Freedom of Religion does not apply here to support your action of citing it in the first place. This is not about Rights, because your thread topic isn't religious in nature, but you still wished to include religious verses and references where none are needed or required. My annoyance at your frequent usage of these references is due to the fact that they neither add to nor *enhance your literary composition. They are dead weight, fats that can be trimmed off, etc. to tighten your posts. These "inclusions" can be better substituted with more commonly used and understood words.

My criticism here is for your benefit. If you were writting an essay (for example) on your religious beliefs, I would not have offered it.


Edits: To avoid appearing evasive, I shall also address your (cherrypicked) point directly since you appeared to have taken some offence. My usage of the term "abrahamic fairytale" is a fair and honest comment, and I am aware that the abrahamic faith consist of judaism, christanity, and islam.