A Singapore court has ruled against three doctors who attempted to evade income tax by channeling their earnings through a network of companies.
The physicians structured their compensation to receive minimal salaries while extracting the bulk of their profits as dividends, which are exempt from personal income tax in Singapore.
The court found this arrangement to be a deliberate attempt to avoid tax liabilities rather than a legitimate business structure.
The ruling underscores the judiciary's willingness to pierce the corporate veil when the primary purpose of a structure is tax avoidance.
By recharacterizing the dividend payments as taxable income, the court effectively nullified the tax benefits the doctors sought to claim.
This decision serves as a warning to high-net-worth professionals and private practitioners who rely on complex corporate setups to minimize their tax burden.