Singapore’s tax authority has imposed more than S$6.8 million in taxes and penalties on several nightclubs for failing to properly declare income from flower garland sales, according to the Inland Revenue Authority of Singapore (IRAS).

Since 2021, IRAS has taken action against eight nightclubs that underreported revenue from these sales, which are considered taxable supplies subject to goods and services tax (GST). The garlands, purchased by customers and given to performers as tokens of appreciation, generate income that nightclubs must fully report, with GST applying to the total sales amount rather than just the portion retained by the venues.

In a public statement released on July 3, IRAS highlighted its ongoing efforts to clarify tax obligations for businesses involved in flower garland sales. The authority noted that it conducts regular, risk-based audits across industries to ensure compliance and requires businesses to submit relevant documentation to verify tax filings. Companies found to have concealed income or inadequately maintained records face penalties and enforcement measures.

IRAS pointed out that some nightclub operators have attempted to circumvent tax rules through deceptive accounting practices. In one notable 2021 case, Goh Kim Teck, the manager of Century 21st Night Club in Robert, was sentenced to three weeks in jail and fined S$8,500 for tax evasion and GST omission. He additionally paid nearly S$340,000 in penalties. Investigators revealed that between 2011 and 2014, Goh instructed staff to avoid recording cash sales for flower garlands in the club’s cash register, effectively hiding revenue from auditors and accountants.

A similar incident occurred in 2022 involving Soon Kok Khoon, who ran Club Poison Entertainment and West Palace Entertainment. Soon was jailed and fined S$630,861 for directing accountants to omit significant revenues from garland sales, which ranged from S$50 to as high as S$100,000 per transaction. He also directed that the sales proceeds be channeled to two shell companies not registered for GST, further obscuring the true income of his clubs.

Besides GST issues, IRAS reminded nightclubs of their responsibility to withhold tax on income earned by non-resident performers. A 15% withholding tax applies to payments made to these performers, encompassing both salaries and amounts received from flower garland sales. Nightclubs must file and remit the withholding tax to IRAS by the 15th day of the second month following the payments.

The tax authority’s increased scrutiny and enforcement underscore its commitment to ensuring accurate tax declaration within the entertainment industry, specifically regarding the burgeoning but closely monitored flower garland revenue stream.