Following the recent tax evasion sentencing by High Court in Tan Song Cheng v Public Prosecutor, a high court sentencing framework has been established for offences under s96 of the Income Tax Act. This framework arose out of the need for a consistent and coherent sentencing for all future income tax evasion cases to avert the herd judgement mindset of sentences clustering at the lower end of the custodial sentencing. This also sends a strong signal of the Singapore Courts’ intent for a low tolerance for the increasingly complex, transnational nature of tax evasion and the sentencing should appropriately reflects the severity of each case.
Gone now are the norm of just financial penalty as the main sentencing for income tax evasion. Imposition of imprisonment was the exception and the terms meted out to range from one to six weeks. The new 5 step sentencing framework will now consider the seriousness of the crime and specifically assess the harm caused by the offence and the culpability of the offender as follows:
Step 1: Identify the level of harm caused by the offence and the level of culpability of the offender.
In assessing the level of harm, the courts will need to consider the amount of income tax evaded and whether there is any syndicate and transnational involvement. In assessing culpability, the courts will consider the degree of planning/premediation, crime sophistication against detection, offence duration, role of offender and whether there is an abuse of fiduciary position or breach of trust.
Step 2: Identify the applicable indicative sentencing range.
A 3×3 Culpability level/Tax evasion amt sentencing matrix was adopted for low/medium/high culpability and level 1/2/3 harm based on income tax evaded (<$75k/$75k-$150k/>$150k). The sentencing outcome ranges from just fine to imprisonment terms of 6 to 36 months.
Step 3: Identify the appropriate starting point within the indicative sentencing range.
This is a mechanism to re-examine the offence-specific factors and culpability factors.
Step 4: Adjust the starting point to take into the account offender-specific mitigating and/or aggravating factors.
This is the next mechanism to adjust for any aggravating or mitigating factors eg relevant antecedents, evidence of lack of remorse or voluntary restitution or guilty plea, co-operation with the authorities, other offences taken into considerations etc
Step 5: Make further adjustments to take into consideration the totality principle.
This is the final adjustment in totality considering the overall sentencing for the offender.
It is perhaps early days for how this sentencing framework will be applied in the future, but it is certain for sure that all tax evasion now be systematically assessed and will no longer be just a fine. The historical imprisonment sentencing of one to six weeks will also not be the default and tax offender will need to prepare for a deterrence imprisonment terms of up to 36 months.