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Media Statement I am filled with disappointment and regret that the Inland Revenue Authority of Singapore (IRAS) has singled out myself to initiate litigation on tax disputes concerning four companies of which I was one of the directors from 1998 to 2001. The companies concerned began operations in Singapore about 10 years ago. Upon receiving notice from the IRAS relating to further investigation into the tax matters of the concerned companies three years ago, I have been given the investigation my full support by maintaining communication with the Authority and providing them with relevant information. As I have always been focused on growing the business, I have let my accounting and tax affairs tended by professionals in the past 20 years. In an effort to facilitate better understanding of different accounting practices, I have engaged one of the Big Four accounting firms to provide professional advice to the IRAS to help them better understand the operations of the beauty industry and its accounting practice in the hope of achieving a consensus. The beauty industry all along has adopted the Accrual Basis for computation of income. Likewise, the beauty industry in Hong Kong, mainland China and Malaysia has all along adopted this Accrual Basis for computation of income. But, IRAS did not accept the Accrual Basis all along adopted by the beauty industry and changed to use the cash basis for computation of the income of the companies concerned for the period from 1997 to 2001. However, IRAS has accepted and adopted the Accrual Basis all along adopted by the beauty industry for computation of the income of the companies concerned for the period from 2001 up to now. Despite three years of open and frank communications, I regret to say that I have been unable to reach a consensus with the IRAS with regards to the above disagreement. As a hardworking, conscientious and law-abiding person, I deeply regret that the tax dispute remains unresolved at this moment. As the matter is in legal proceedings, I can only offer the above information as a reference for all. I also would like to state that the above litigation is purely related to my personal business in Singapore during 1998 to 2001. It has no connection with the Hong Kong-listed Modern Beauty Salon Holdings Limited. Finally, I appeal to my fellow practitioners in the beauty industry in Singapore to proactively engage the relevant authorities and communicate with them the characteristics of the beauty industry, in particular the accrual based accounting practice adopted by the industry, to avoid similar unfortunate events from occurring in the future. Joyce Tsang 19 December 2008 Summary of Views of Accounting Professionals According to the review by the IRAS, the companies concerned have under declared revenue from 1998 through to 2001. The companies concerned have engaged one of the Big Four accounting firms and certain accounting professionals who are familiar with the beauty industry to provide their expert opinion. Their opinion is summarized here in three main points: 1. The companies concerned had always engaged in selling prepaid packages to customers who would pay by credit card or in cash in advance before enjoying the services. This is a common practice in the beauty industry and is widely accepted by consumers. Between 1998 and 2001, there were about 3,000 customers who did not fully use up the value of the prepaid package they had purchased. In line with accrual based accounting method the companies did not recognize those remaining value as revenue because the customers had not yet fully spent them. But the IRAS view is that the remaining value should be treated on a cash accounting basis, meaning the revenue from sales of prepaid packages should be recognized in the relevant year regardless whether the customer has actually fully spent it. Therefore the IRAS allege that the concerned companies had failed to fully declare their income and pay the tax supposedly due to them. The engaged accounting professionals opined that the IRAS practice has not taken into account the characteristics of the beauty industry and, in this instance, has inappropriately used cash accounting method to determine the revenue of the concerned companies. Furthermore, they do not see why the IRAS on the other hand allow the companies concerned to account for its prepaid package revenue on an Accrual Basis from 2001 onwards. 2. In Singapore , accounting records should be kept for a minimum of 7 years. As the re-examination of the books involves retrieving records from a long time ago, many records are no longer available. Because of that the IRAS insists that certain actual expenditures and key expenses, such as material costs, could not be included as costs. Instead, the IRAS evaluates the companies' revenues in the relevant period on the basis that the cost of goods sold constituted 14% of the companies' revenues, which led to over-evaluation of net profits and tax liabilities at the concerned companies. The professional opinion of the accountants engaged is that cost of sales in the beauty industry in general accounts for about 70% of revenue, which is much higher than the 14% estimates used by the IRAS in its evaluation of the industry's cost. 3. Based on the two factors stated above, the IRAS alleged that net profit margins at the companies concerned were as high as 40%. But according to the accounting professionals engaged a net profit margin at about 10% is considered fairly good in the industry. The tax liabilities of the companies concerned in the relevant period have been over estimated by the IRAS. 媒體聲明 本人對於新加坡國內稅務署就四間設有三名董事並於 1998 至 2001 年期間在新加坡營運的公司，作出只針對本人作為其中一名董事而提出檢控的稅務訴訟感到非常無奈和遺憾。 有關訴訟所涉及的公司，約十年前在新加坡營運。本人於約三年前接獲覆核有關公司稅務的通知後，一直以充分合作的態度，與新加坡國內稅務署保持溝通，並全力配合提供相關資料。 鍳於本人只專注發展事業，會計、稅務及繳款等事宜過往 20 多年均交予專業人士處理，對專業人士充滿信任。為促進彼此溝通，本人更委任全球四大其中之一的國際會計師事務所向新加坡國內稅務署提供專業意見，以協助當局瞭解美容業界的運作，希望雙方能夠在會計處理上達成共識。 綜合上述國際會計師事務所和多位會計界專業人士的意見，有關公司與新加坡國內稅務署就訴訟所涉及稅項評估上的分歧， 是源於如何確認收入、營運開支和利潤三個方面 。 有關公司會竭盡全力向新加坡國內稅務署解釋以 ” 實報實銷準則 (Accrual Basis)” 計算利潤的經營方式，為美容業界解决此不明確因素和潛在風險。 一直以來，美容業界均沿用 “ 實報實銷準則 (Accrual Basis)” 計算收入；同樣，香港、中國大陸、馬來西亞的美容業界一直以來也沿用此 “ 實報實銷準則 (Accrual Basis)” 來計算收入。 但新加坡國內稅務署不接納美容業界一直沿用的 “ 實報實銷準則 (Accrual Basis)” ，改為採用現金方式 (Cash Basis) 來計算有關公司於 1997 至 2001 的收入。 不過，新加坡國內稅務署又重新接納和採用美容業界一直沿用的 “ 實報實銷準則(Accrual Basis)” ，來計算有關公司由 2001 至現今後的收入。 對於經過了三年多時間的真誠溝通，仍無法與新加坡國內稅務署就上述分歧取得共識，本人感到十分無奈。作為一個只顧埋頭苦幹、忠於事業和守法交稅的商人，本人亦對事件目前的發展感到非常遺憾。不過，由於有關訴訟正在進行中，現階段本人只能向各界提供上述資料作參考。 本人同時聲明，上述訴訟純屬本人在新加坡1998至2001年期間的私人事務，與在香港上市的現代美容控股有限公司沒有任何關連。 最後，本人呼籲在新加坡經營美容業務的同僚，應主動與新加坡有關當局就美容行業的特性，尤其是以 ” 實報實銷準則 (Accrual Basis)” 計算利潤的經營方式進行溝通和商談繳稅準則，避免同類不幸事件的發生。 曾裕 2008 年 12 月 1 9 日 會計界專業人士意見摘要 關於新加坡國內稅務署覆核訴訟所涉及的公司在 1998 至 2001 年間的收入，並得出結論指有關公司少報收入，有關公司主動邀請全球四大國際會計師事務所之一和多位熟識美容行業的會計界專業人士，提出第三方意見。摘要如下： 1) 有關公司一直以預付套票方式進行銷售，顧客先以現金或信用卡預付款，後使用服務。這樣的經營方式是美容行業的普遍做法，消費者亦接受。由 1998 至 2001 年，約有 3,000 名顧客預付款後沒有完全使用套票。有關公司沒有將套票餘額撥作收入，因為顧客當時仍未使用服務，這是實報實銷 (Accrual Basis) 的會計做法。但新加坡國內稅務署採用現金方式計算有關公司收入，即使顧客還未使用服務，有關公司收到顧客的預付款即時等於收入，因而指控有關公司少報收入，少交稅款。上述會計界人士認為，新加坡國內稅務署的做法，未有充分考慮美容行業的經營特點，不恰當使用現金方式計算有關公司的收入。與此同時，他們不理解為何新加坡國內稅務署在另一方面又同意被告公司在 2001 年以後按實報實銷 (Accrual Basis) 的會計做法處理套票預付款餘額。 2) 新加坡法例規定保留會計帳冊的年期為 7 年。新加坡國內稅務署覆核的帳目時間久遠，部份會計帳冊不存。對於很多沒有會計記錄的銷售成本，包括實際和必要開支如物料等，新加坡國內稅務署堅持不計入成本，從而得出銷售成本佔收入 14% 的比例，變相放大有關公司的純利和應付稅項。根據上述熟識美容行業的會計界人士的意見，一般來說，美容行業的銷售成本約佔收入的 70% ，新加坡稅務當局得出的 14%的比例，遠低於行業的實際情況。 3) 由於上面兩個因素，新加坡國內稅務署指稱有關公司的純利為 40% 。但根據上述會計界人士的意見，行業內的純利率能夠達到 10% 已經非常不錯。新加坡稅務當局對被告公司的稅務覆核，是高估了有關年度的收入。 |