Key Lessons From The Latest Singapore Medical Professionals Case
The High Court decision in Tan Chek Jin Adrian and others v Comptroller of Income Tax [2026] SGHC 132 is an important reminder that tax-efficient structuring must be supported by commercial substance, credible evidence and ongoing governance.
The case involved three specialist obstetricians and gynaecologists — Dr. Tan, Dr. Khi and Dr. Wong – who had worked together at a hospital before moving into private practice as partners.
At the heart of the case was the question of when legitimate business structuring crossed the line into tax avoidance.
Background
The doctors had organised their private practice through several companies.
In 2004, the three doctors incorporated ACJ Women’s Clinic Pte Ltd as joint shareholders, with each doctor employed by the company at a monthly salary of S$5,000, excluding bonus. This company invoiced patients for both inpatient and outpatient services.
Between 2005 and 2007, each doctor formed their own companies to invoice ACJ Women’s Clinic, with each of them employed for monthly salaries of $6,000. It was submitted during the case that this was required to ensure equitable profit distribution.
In 2014, each added a second private company, which invoiced patients for inpatient services. ACJ Women’s Clinic continued to invoice for outpatient services. It was stated that this was done to segregate the inpatient and outpatient income streams.
Each time a new company was incorporated, it allowed the doctors’ companies to access the Start-Up Tax Exemption (SUTE) and Partial Tax Exemption (PTE) concessions.
In 2016, the doctors took steps to strike off the personal companies formed between 2005 and 2007. The Inland Revenue Authority of Singapore (IRAS) objected to the applications made for each company and commenced an audit of each company which expanded to the entire arrangement.
IRAS’s Position And Assessment
IRAS took issue with the way the structure operated and concluded that the doctors’ salaries and directors’ fees did not reflect the true economic value of their professional contributions. Prior to the incorporation of ACJ Women’s Clinic, each doctor drew monthly salaries of $40,000 – $50,0000.
IRAS also took issue with substantial profits being extracted through tax-exempt dividends and interest-free shareholder loans, while the doctors’ taxable remuneration remained relatively low.
IRAS invoked section 33 of the Income Tax Act, Singapore’s general anti-avoidance provision, and issued additional and amended assessments for Years of Assessment 2013 to 2018 to each doctor.
The doctors challenged IRAS before the Income Tax Board of Review and then before the High Court of Singapore.
They argued that the various entities should not be treated as a single arrangement, and that each company had genuine commercial purposes, including limiting liability, allocating profits more fairly and separating inpatient from outpatient services.
Finally, the doctors argued that any tax advantages arose from changes in the tax environment over time that they could not have foreseen when the structure was first created.
The Ruling By Justice Wong
Justice Wong rejected these arguments and confirmed that the Comptroller and the Income Tax Board of Review were entitled to look at the arrangement holistically.
Justice Wong ruled that Section 33 of ITA is broad enough to cover a combination of steps, even if each individual step may appear unobjectionable on its own. In this case, Justice Wong stated that each company associated with the doctors were connected through arrangements that evolved over time.
A particularly important part of the judgment is the court’s treatment of purpose. The doctors’ case focused heavily on their intentions when the structure was first put in place. Justice Wong made clear that this was too narrow. Tax arrangements often operate over many years, and motivations can evolve as businesses grow and tax laws change. The court was therefore entitled to examine not only why the structure was created, but also how it was implemented and used in practice.
The evidence was critical. Only Dr. Tan gave evidence. Dr. Khi and Dr. Wong did not, which hindered their case as the statutory exception under section 33 requires an inquiry into each taxpayer’s subjective commercial motives and intended consequences. The two doctors relied on Dr. Tan providing the evidence on behalf of all the parties – which was a flawed position.
For Dr. Tan, the court accepted that there may have been bona fide commercial reasons for establishing ACJ Women’s Clinic at the outset. However, Dr. Tan did not adequately explain why his S$5,000 monthly salary remained unchanged as the practice became more profitable, or why substantial profits were instead extracted as dividends and shareholder loans.
For the Years of Assessment 2013 to 2018, the Comptroller valued Dr. Tan’s tax-exempt dividends from ACJ Women’s Clinic at S$1.6 million, with shareholder loans to the doctors collectively exceeding S$1 million.
The court also gave little weight to Dr. Tan’s references to discussions with his accountant. The accountant was not called as a witness, and no written advice was produced.
Justice Wong noted that if professional advice had been central to the structuring, evidence of that advice should have been provided.
This is one of the most practical lessons from the case: commercial rationale should be documented contemporaneously, not reconstructed years later during an audit or dispute.
The doctors also sought to rely on the SUTE and PTE provisions. Justice Wong held that these incentives were intended to encourage entrepreneurship, business growth and reinvestment. On the facts, the medical and surgical companies were not shown to have pursued business ideas or reinvested profits to grow their businesses.
They were viewed as corporate vehicles used to receive income and shield liabilities. The court therefore held that the incentive provisions did not prevent IRAS from applying section 33.
Key Take Aways
For business owners and founders, this case highlights that your legal form must align with commercial and economic realities. Remuneration policies should be market-aligned and defensible.
Intercompany arrangements should reflect actual functions, assets and risks. Dividend and loan policies should be explainable and again, mirror commercial practice. Most importantly, the commercial reasons for a structure should be properly documented and reviewed as the business grows.
Singapore remains an attractive and business-friendly jurisdiction. But this decision shows that IRAS and the courts will scrutinise arrangements that produce significant tax advantages without sufficient commercial substance.
If you are looking to establish your business in Singapore, you must ensure that you take professional advice that is documented and reviewed regularly as your business grows.