30th May 2023
Another week goes by with a huge number of professionals and businesses being caught up in high profile tax and compliance cases. Contractors working overseas are likely to be only too aware of the risk of breaching regulations when working overseas, but as the below stories highlight, being aware of your compliance status is only one half of the battle. Governments around the world are seeking to balance their national books by clamping down on any individual or firm they consider to be breaking the law and, while the international tax market has always been fraught with risk, the situation has never been more challenging than it is today. Take a look at some of the latest stories from recent weeks that highlight just how important it is to remain compliant when working internationally.
Netflix murderer Murtaugh now faces tax evasion charges from prison
Alex Murdaugh, who featured on the eponymous ‘Murdaugh Murders’ docuseries on Netflix has landed himself in even more trouble as a result of being charged with two counts of tax evasion, after prosecutors reviewed his final tax returns before his sentence started. The former attorney, who was highly respected for his role as a leading legal figure in South Carolina, is currently serving a sentence of life in prison without parole after a jury found him guilty in March of the deaths of his wife and younger son in 2021. However, he now faces over 100 other charges, including tax evasion as well as charges he stole money from clients, ran a drug and money laundering ring and tried to defraud his life insurer into paying a $10 million policy by having a friend kill him. In the decade from 2011, Murdaugh made over $16 million as a lawyer, while stealing about $9 million from his law firm, according to indictments and, in 2020, he avoided paying more than $67,000 he owed in taxes after making more than $1.1 million from his law firm and an additional $1.1 million through theft and money laundering. Murdaugh maintained his innocence as he was sentenced to life in prison without parole and is appealing the convictions. He is currently being held in protective custody, however this hasn’t enabled him to avoid the additional tax evasion charges, showing the extreme lengths that prosecutors will go to in order to sanction anyone suspected of committing financial crimes.
Singapore Airlines pilot lands 6-month jail sentence for tax evasion
A Singapore Airlines pilot has been sentenced to six months’ in jail after he pleaded guilty to four charges under the domestic Income Tax Act. In addition to the jail sentence, Andrew Soo Cheng Ai, 51, will also have to pay fines totalling S$181,996. Soo failed to declare rental income from two properties in Singapore worth nearly S$90,000 resulting in him avoiding payment of S$15,354 in taxes. Investigations from the Singapore tax authority (IRAS) revealed that he made false entries in his Form B1 Income Tax return for Year of Assessment (YA) 2014 with the intent to evade paying tax. Soo also gave false replies in response to IRAS’ request for information regarding his rental properties during an audit which would have led to him evading an additional S$35,000 in taxes. The pilot created and submitted multiple fictitious invoices and documents to IRAS, to support his inflated claims for expenses for his rental properties. In Singapore, offenders found guilty of evading tax face the prospect of a penalty of three times the amount of tax undercharged, and are liable for fines of up to S$10,000 and potential seven-year prison sentences, highlighting the importance of getting your taxes right when operating here.
Asian nations uncover over 20bn in additional revenue through tax transparency network
Asian nations participating in a global tax transparency network have identified a staggering €20.1bn in additional revenue in the form of tax, penalties and accrued interest since 2009, according to a report released last month. The Global Forum on Transparency and Exchange of Information for Tax Purposes, launched by the OECD and which currently has 17 nations signed up to take part reported that the commitment to information exchange and tax transparency is growing among participating countries. The report, titled ‘Tax Transparency in Asia 2023’, outlined that tax evasion and other forms of financial fraud are ‘a global problem that hinders domestic resource mobilisation, undermines the credibility of tax systems, and results in significant revenue loss for governments.’ However, it appears that despite the major haul, the G20 President nation, India, is of the view that more needs to be done to tackle the illicit cash flows and has advised that a feasibility study should be conducted with a specific scope to investigate property transactions on the continent. The report stated that, “tax transparency has been a critical tool to address these serious issues, with concrete impact on domestic resource mobilisation. At the core is the regional and global co-operation between tax administrations, which ensures the cross-border exchange of information relevant for tax purposes. As in all regions of the world and despite the progress achieved, tax evasion and other illicit financial flow remains an issue in Asia and deprive governments of much-needed resources for their development strategies”. The automatic exchange of information among tax authorities has gained momentum in recent years with various investigations bringing the spot light on aggressive tax avoidance and evasion by corporations and individuals, money laundering. Global authorities are increasingly relying upon automatic exchanges of information to tackle this fraud and contractors operating in Asia should take heed of the efforts being made to tackle anyone suspected of acting illegally.
Make no mistake, while governments and tax authorities are targeting major firms and corporations, they’re also on the lookout for legal breaches committed by individuals wherever they are operating. With the potential for major fines and prison sentences for non-compliant behaviour, contractors simply shouldn’t take the risk. This is a highly complex and rapidly evolving world and if you’re unsure about your status then ensure you get in contact before unknowingly committing any crimes.
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