A mother and her son have become the first individuals in Singapore to be charged for providing false and misleading information to the Inland Revenue Authority of Singapore (Iras) in a case linked to the “99-to-1” property arrangement. This legal action comes as part of Iras’ ongoing efforts to clamp down on property tax avoidance schemes.
The mother, 56-year-old Ng Chiew Yen, and her 26-year-old son, Keith Tan Kai Wen, each face five charges of conspiring to give misleading information to the tax authorities. According to Iras, Tan initially purchased a condominium unit at The Watergardens at Canberra in Sembawang on Sept 24, 2021. Shortly after, he sold a 1% share of the property to his mother, sparking suspicion during an audit.
The audit revealed that Tan had claimed his decision to buy the property was rushed, expecting financial support from his family. When that support didn’t materialize, he said he added his mother as a co-owner to secure a loan. However, Iras found discrepancies in his explanation, including incomplete WhatsApp messages and other misleading responses.
The “99-to-1” scheme is a tactic used by some property buyers to avoid paying the full Additional Buyer’s Stamp Duty (ABSD). In this setup, the first buyer, typically someone with no prior properties, purchases the home under their name and later sells a small share—usually 1%—to a second party with a higher ABSD profile. By doing this, the ABSD is only applied to the small share, rather than the entire property value, reducing the tax liability.
Iras has uncovered 166 such cases as of April 2024, with plans to recover around S$60 million in ABSD and surcharges. If convicted, both Tan and Ng could face fines up to S$10,000 or imprisonment for up to two years.
For a property like the one involved in this case, valued at S$1.1 million, the ABSD for a second property would be S$220,000. For a third or subsequent property, this would rise to S$330,000. If Iras finds tax avoidance, it will recover the correct amount of stamp duty and may impose a 50% surcharge.
Iras regularly audits property transactions to detect non-compliance, with a particular focus on identifying arrangements like the “99-to-1” scheme. The agency encourages individuals involved in such arrangements to voluntarily disclose their transactions. Whistleblowers who provide information that leads to tax recovery may receive a reward of up to 15% of the recovered tax, capped at S$100,000.
The landmark prosecution serves as a reminder to those looking to bypass ABSD rules. Iras remains vigilant in its efforts to maintain tax compliance across property transactions, and the repercussions of these avoidance tactics are becoming more apparent.