GST 2016001

Fraudulent GST claims by a GST registered business

19 Feb 2016: Mastermind of GST Fraud Jailed 8 Weeks Tan Wan Wen, who masterminded a plan to defraud the Comptroller of Goods and Services Tax (“GST”) of GST refunds by using multiple shell businesses, was sentenced to 8 weeks in jail. She was also ordered to pay a penalty of $55,141.17, three times the amount of GST refunds that were fraudulently claimed.

IRAS Auditors Detected the Fraudulent GST Refund Claims During the course of audit, IRAS’ auditors observed peculiarities in the GST refund claims made by several businesses. IRAS’ auditors also discovered that these businesses that were registered under different individuals’ names were connected to Tan Wan Wen.

Tan Wan Wen had made use of the names of several acquaintances and her husband to set up various shell businesses with the intention of defrauding the government of the GST refund. These businesses are Alco Industrial Supplies Pte Ltd, Eltronic Marketing Pte Ltd, Newmart Trading & Services and Raco Industrial Supply. Our investigation officers uncovered that fictitious or “paper” transactions were carried out between these businesses. Tan Wan Wen then assisted these shell businesses to make false declarations on their respective GST returns in 2008. Through these shell businesses, she had fraudulently claimed a total amount of $18,380.39 in GST refund.

Court Sentences

Tan Wen Wen pleaded guilty to three charges while the remaining four charges were taken into consideration for the purpose of sentencing. She was sentenced to 8 weeks in jail and ordered to pay a penalty of $55,141.17, three times the amount of GST refund fraudulently claimed.

Severe Penalties for Fraudulent GST Claims

It is a serious offence to claim GST input tax on fictitious purchases or understate output tax on sales. Offenders face a penalty of up to three times the amount of tax undercharged, a fine not exceeding $10,000, and/or imprisonment of up to seven years

Unlawful collection of GST by a nonGST registered business

25 Oct 2013: Manager faced hefty penalty for unlawful collection of GST

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15 Oct 2014: Switchboard manufacturer and company
manager fined for unlawful collection of GST
The court has ordered Double H Switchboard Market Pte
Ltd (“Double H”) and its 61-year-old manager, Fong Looi Hoei (“Fong”), to pay a total penalty and court fine of $295,258.65 for the unlawful collection of more than $30,000 of GST from customers when the company was not a GST-registered company.

Unlawful collection of GST:

It is a serious offence for businesses that are not GSTregistered to charge and collect GST from their customers. Offenders face a penalty of 3 times the amount of tax collected without authorisation, and a fine of up to $10,000 for each offence. IRAS conducts audit programmes to identify non-compliance of GST laws, including checking on whether businesses charge, collect and claim GST correctly. This case was uncovered in one of such audit programmes.

How the offence was committed:

Fong and her husband ran a sole-proprietorship business, Double H Switchboard Market (“DHSM”), from 4 Aug 2004 to 3 Aug 2005. They set up another company, Double H on 16 Jun 2005 and closed down DHSM after that. Although Fong’s three children are registered as the directors of Double H, the business is effectively run by Fong and her husband. Fong is in charge of the company’s accounting, bookkeeping and administrative matters. IRAS’ investigations revealed that Fong had issued 42 and 156 invoices with GST amount under DHSM and Double H respectively between Dec 2004 and Jul 2006. She had unlawfully collected a total of $38,371.80 in GST from her customers when both DHSM and Double H were not registered for GST. Double H was only registered for GST with effect from 1 Aug 2006. Fong faced a total of 198 charges on unlawful collection of GST. She pleaded guilty to 66 charges that were proceeded on, with the remaining 132 charges taken into consideration for sentencing. She has to pay a tax penalty of $91,598.70, which is three times of the unlawful collection of GST amounting to $30,532.90. Double H was also ordered to pay a tax penalty of $62,059.95 on 52 charges that were proceeded on, with the remaining 104 charges taken into consideration for sentencing. The court also fined Fong and Double H $1,200 on each charge, which amounted to $141,600

Omission of collection of GST by a GST registered business

29 Oct 2014: Construction company and director fined for omitting GST on property sale

A construction company and its director were each ordered by the court to pay a penalty of $191,268 – two times the amount of GST evaded – and a fine of $2,000 for failing to account for GST on the sale of a property at Woodlands Industrial Park. Junling Construction & Engineering Pte Ltd (“Junling Construction & Engineering”) and its director, Cheah Wai Fun, 52, were charged for not reporting the amount of GST collected from the sale of a property in the company’s GST return in 2011.

Offence to omit output tax on sale of non-residential property: IRAS’ investigations revealed that Junling Construction & Engineering sold a non-residential property at Woodlands Industrial Park on 9 Feb 2011. The buyer paid Junling Construction & Engineering $1.38 million for the property and $96,600 for the 7% GST on the selling price. Cheah Wai Fun, who was responsible for filing GST returns and issuing tax invoices for Junling Construction & Engineering, did not account for the $96,600 collected as an output tax in the company’s GST return for the accounting period ended 31 Mar 2011. As the director of Junling Construction & Engineering, Cheah Wai Fun had failed to ensure the accuracy of Junling Construction & Engineering’s GST return.Together, Junling Construction & Engineering and Cheah Wai Fun have to pay a total penalty of $382,536 and total fine of $4,000 for the GST offence.

Charging and Accounting for GST: Businesses may buy and sell properties in the course of their business. Under the GST law, GST-registered businesses have to account for GST collected on the sale of non-residential properties as an output tax in their GST returns. They can also claim the GST paid on the purchase of non-residential properties as an input tax in their GST returns.

Penalties for Making Incorrect GST Return: It is a serious offence to omit or understate output tax on sales. Offenders face a penalty that is double the amount of tax undercharged, and a fine not exceeding $5,000 or imprisonment of up to 3 years or both

GST 2015002

Fraudulent GST claims by a GST registered business

21 Jul 2014: Fraudulent GST claims put company manager in jail

Samuel Sim Choon Hock (“Sim”), a manager of Netlink Alliance Pte Ltd (“Netlink”) at the time of offence, was sentenced by the court to 18 weeks’ jail after pleading guilty to 8 charges. He was also ordered to pay a penalty of $183,925.62, which is three times the amount of fictitious claims for GST refunds of $61,308.54 that he had made in the company’s GST returns.

IRAS’ audits detected anomalies in GST declarations: GSTregistered businesses offset the GST they pay for their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. If the business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim the difference from IRAS in the form of GST refunds. IRAS conducts audits on businesses and uses data analytics tools to detect anomalies in the input tax and output tax claims of GSTregistered businesses. This case was uncovered in one of such audit programmes. Netlink, a GST-registered company, is in the business of import and export of IT equipment. IRAS’ investigations revealed that Sim inflated the input tax claims and understated output tax on sales in the company’s GST returns from Feb 2006 to Jul 2008. Sim faced 24 charges of making fraudulent GST claims amounting to a total of $116,558.04. He had used the money to pay for his personal and family expenses. Sim pleaded guilty to 8 charges. The remaining 16 charges were taken into consideration in the sentencing as Sim was cooperative during the investigation process.

Severe Penalties for Fraudulent GST Claims:

It is a serious offence to claim input tax on fictitious purchases or understate output tax on sales. Offenders face a penalty of up to 3 times the amount of tax undercharged, a fine not exceeding $10,000, and/or imprisonment of up to 7 years

19 Sep 2014: Manager Guilty of GST Fraud Sentenced to 6 Weeks’ Jail

Wong Weng Hong, manager of LJK Famco – a GSTregistered sole-proprietorship set up under the name of Chan Shen Cheong and in the business of general wholesale trade – was sentenced to 6 weeks’ jail and was also ordered by the Court to pay a penalty of $105,439.89, three times the amount of fraudulent GST refund claims made.

GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. Businesses that incur more GST on purchases than they collect from sales can claim the difference from IRAS in the form of GST refunds.

Fictitious GST Refund Claims Uncovered by IRAS Auditors:

It was during one of our regular audits that the auditor came across suspicious quarterly GST returns submitted under Chan’s name. Further investigation revealed that Wong Weng Hong had used Chan’s name to set up LJK Famco in 2008. Wong Weng Hong had obtained Chan’s SingPass to e-file the GST returns of Chan. Wong Weng Hong admitted he was the person who had e-filed Chan’s GST returns with random figures, without having considered the genuine amount of purchases made by LJK. Information gathered from LJK’s suppliers also did not substantiate the input tax claims in LJK’s quarterly GST returns for accounting periods ended in Jan, Apr and Jul 2009. Wong Weng Hong had wilfully with intent to fraudulently obtain GST refunds, declared fictitious figures in multiple GST returns to obtain GST refunds that he was not entitled to.

Severe Penalties for Fraudulent GST Claims: IRAS takes a serious view of tax criminals and will not hesitate to take stern action against those guilty of defrauding the State. It is a serious offence to claim input tax on fictitious purchases or to understate output tax on sales. Offenders face a penalty of three times the amount of tax undercharged, a fine of up to $10,000, and/or jail term of up to 7 years

Fraudulent GST claims by a GST registered business using shell entities

10 Jul 2014: Mastermind of GST Fraud Jailed 15 months and Fined $1.2m

The first GST fraud case involving 10 different entities has been concluded in Court. Eric Chia Puay Yeoh (“Chia”), the mastermind behind a complex GST scam using multiple shell entities, was sentenced to 15 months in prison. Chia colluded with his accomplices to defraud the Comptroller of Goods and Services Tax (“GST”) of GST refunds totalling $953,192.07 from Jan 2005 to Mar 2007. For his criminal actions, Chia landed in court today with 122 charges of defrauding GST refunds and wilfully with intent assisting his accomplices to make fictitious GST claims in their GST returns. Chia pleaded guilty to 45 charges while the remaining 77 charges were taken into consideration for the purposes of sentencing. In addition to imprisonment, the court further ordered him to pay a penalty of more than $1.2 million being three times the amount of the fictitious claims for GST refunds amounting to $400,394.27.

GST Laws:

GST-registered businesses are allowed to offset the GST they pay for their purchases (input tax) against the GST they collect from sales (output tax). They pay the net difference to IRAS. Those that incur more GST on purchases than they collect from their sales can claim the difference from IRAS in the form of GST refunds. Under the GST Act, exports of goods and international services are zero-rated (i.e. GST at 0%). In other words, GST-registered businesses need not collect GST on these exports. However, a GSTregistered business that exports its goods overseas may still claim the full amount of GST incurred on its purchases (i.e. input tax).

Elaborate Fraudulent Scheme:

Chia’s elaborate scheme to commit GST tax fraud first began in Jan 2005 under Kapin Enterprise – a soleproprietorship business registered under his wife’s name. For two years, he inflated the GST refund claims in Kapin’s GST returns by $217,157.62 without his wife’s knowledge.

Elaborate Fraudulent Scheme:

His dishonest acts continued with companies which he owned – Keat Siang Hang Pte Ltd (KSH), World Resources Organisation Pte Ltd (WRO) and Shi Lin Enterprise Pte Ltd. Figures were cooked to make up fictitious GST refund claims of $95,752.95 and $33,055.66 for KSH and WRO respectively, while GST refund claims for Shi Lin were inflated by $82,402.30.

Partners in Crime:

Sharing his modus operandi, Chia assisted three of his accomplices to obtain inflated and fictitious GST refunds. Chia suggested to Foo Tee Suan (“Foo”) to register FTH Enterprise (FTH) – an export business – for GST. He wilfully with intent assisted Foo to make fictitious claims in his GST returns from Jul 2005 to Mar 2007. Thereafter, Chia helped Foo to set up three other businesses, namely F&T Top System Enterprise (F&T), Hwa Rong Enterprise Pte Ltd (HREPL), and Hwa Rong Import & Export (HRIE). These were all shell companies without any business transactions. To illegally obtain GST refunds, Chia declared fictitious figures in the GST returns of FTH, F&T, HREPL and HRIE and fraudulently claimed a total of $458,019.69 in GST refunds from Jul 2005 to Mar 2007. Separately, Chia with wilful intent assisted another accomplice, Ivan Tan Suan Chew, a director of ENV Recycle Trading Pte Ltd (ENV), to make fictitious GST declarations and illegally obtained $35,673.47 in GST refunds from Jul 2005 to Nov 2005. Chia also with wilful intent assisted Sng Kay Heng (“Sng”), the sole proprietor of Strikey Trading (a dormant business), to falsify his documents to make fraudulent claims in his GST returns for the business. Purchases and sales invoices originally issued to Kapin Enterprise were altered by Chia to reflect the name of Strikey Trading. Fictitious GST refund claims of $31,130.38 were then made by Strikey Trading from Nov 2005 to Jan 2006.

GST 2015003

Failure to register for GST for business with turnover > $1 million

11 Apr 2014: Manufacturer pays $170,000 in taxes and penalty for failing to register for GST

A manufacturer of metal doors and windows, Creative Engineering Works Pte Ltd (“CEWPL”), has to pay about $170,000 in taxes and penalty for failing to inform the Comptroller of Goods and Services Tax (“GST”) that it needed to register for GST. The court also ordered CEWPL to pay a fine of $5,500. CEWPL is the second company to be charged in court this year for such offences.

Businesses with over $1 million turnover must register for GST:

Under the law, businesses with annual sales turnover exceeding $1 million must register for GST. A GSTregistered business is required to charge GST on its sales. It can offset this with the GST it pays on its purchases before accounting for the net difference to IRAS. Businesses should regularly assess if they need to register for GST. They must register for GST if their turnover for the past four quarters or expected turnover for the next 12 months exceeds $1 million. This should be done within 30 days of the date their 12-monthly turnover crosses the $1 million mark.

How the offence was committed:

IRAS’ investigations revealed that CEWPL’s taxable turnover for the four quarters ending 30 Jun 2005, 30 Sept 2005, 31 Dec 2005 and 31 Mar 2006 exceeded the $1 million threshold. However, it failed to inform the Comptroller of GST of its liability to register for GST within 30 days of the end of the last quarter, i.e. 30 Apr 2006.

Furthermore, CEWPL deliberately cancelled genuine invoices amounting to $599,389.77 to avoid registering for GST.

For its wilful actions, CEWPL has to pay $154,535.16 of GST that it did not account for between 1 Jun 2006 and 31 Dec 2008. Beyond this, CEPWL has to pay an additional penalty equal to 10% of the amount of the tax due. This amounted to $15,453.53. CEWPL was also fined $5,500 by the Court.

24 Oct 2014: Renovation Contractor penalised for failing to register for GST

Chong Wee Keng, a renovation contractor who owned a sole-proprietorship, D’Esprit Design & Renovations, has to pay a total of $504,500.80 in back-dated taxes and penalty for failing to register for Goods and Services Tax (GST). In addition, he has to pay a fine of $4,500.

IRAS’ audit programme uncovered the offence: IRAS runs regular audit programmes across various industries to check the level of tax compliance of the businesses. Using data analytics tools, IRAS is able to cross-check data and detect anomalies. This case was uncovered through one such audit programme. IRAS’ investigations revealed that Chong Wee Keng was liable to notify the Comptroller of GST of his liability to register for GST by 30 October 2006. However, he failed to do so by the due date; hence, he has failed to account for GST on the sales transactions carried out by the business. Chong Wee Keng must now pay $458,637.09 of GST that he did not account for between 1 December 2006 and 31 December 2010. In addition, he has to pay a penalty of $45,863.71 which is equal to 10% of the amount of the tax due. He was also fined $4,500 by the Court.

28 Mar 2014: Midas Promotions to pay $793,000 in taxes, penalties and fines for failing to register for GST Midas Promotions Pte Ltd (“Midas”), a sports and concerts event promoter, was ordered to pay about $786,000 in taxes and penalty and a court fine of $7,000 for failing to inform the Comptroller of Goods and Services Tax (“GST”) of its liability to register for GST.

How the Offence was Committed:

IRAS’ investigations revealed that Midas’ taxable turnover already exceeded $1 million for the four quarters ending 30 Jun 2004, 30 Sept 2004, 31 Dec 2004 and 31 Mar 2005. It failed to inform the Comptroller of GST of its liability to register for GST within 30 days of the end of 31 Mar 2005, that is, by 30 Apr 2005. Further checks conducted by IRAS with a ticketing company which provided services to Midas confirmed that the total value of all of Midas’ taxable supplies made in Singapore exceeded $1 million during the relevant period. Consequently, a total GST amounting to $714,696.87 between 1 Jun 2005 and 30 Apr 2012 was not accounted for by Midas. In addition to paying the GST, Midas has to pay a penalty equal to 10% of the amount of the tax due. This amounted to $71,469.69. Midas was also fined $7,000 by the Court.

Penalties for Failure to Register for GST:

Businesses failing to register for GST even though they are required to do so by law can be fined up to $10,000 and pay a penalty equal to 10% of the tax due from the date on which the business is required to register for GST. The business’ effective date of GST registration will be back-dated to the day that its liability to register arose. Consequently, the business will have to pay the outstanding GST on all its past transactions since the effective date of registration, even if this amount was not collected from its customers.

23 Mar 2012: Private school pays $70,000 in penalty for failure to register for GST

New Asia Academy Pte Ltd, a private school providing higher educational learning and training courses, was ordered to pay a penalty of $64,188.07 and a fine of $6,000 for not registering its business for Goods and Services Tax (GST). Under the law, it is compulsory for a business with annual taxable business turnover exceeding $1 million to register for GST. A GST-registered business is required to charge GST on its sales and can offset the GST it pays on its purchases before it accounts the net difference to IRAS. Businesses are required to regularly assess whether they need to be registered for GST. In most cases, registering for GST is compulsory when the business’ taxable turnover for the past 4 quarters is more than $1 million or when the business’ taxable turnover for the next 12 months is expected to exceed $1 million. Businesses need to apply for GST registration within 30 days of the date on which the liability to register for GST arises.

IRAS’ investigations revealed that New Asia Academy’s taxable turnover for the 4 quarters ended 30 Sep 2007 exceeded $1 million. It failed to register for GST within 30 days of the end of the quarter i.e. 30 Oct 2007 and was only registered for GST with effect from 1 Aug 2009. Consequently, New Asia Academy did not account for the GST amounting to $641,880.67 on the $9.8 million of taxable turnover from its customers between 1 Dec 2007 and 31 Jul 2009. In addition to paying the GST to IRAS, New Asia Academy has to pay 10% penalty of the tax, which amounted to $64,188.07 and a fine of $6,000

GST 2015004

Fraudulent GST claims and fraudulent GST registration

19 Oct 2012: First trader charged for false declaration in GST Registration

A wholesale trader, Seow Ming Liang (“Seow”), is the first to be charged for giving false information in the voluntary registration for GST for his business. He was also charged for creating fictitious entries in his GST returns to make a fraudulent claim for GST refunds. Seow was sentenced to 6 weeks’ jail and ordered to pay a penalty of $298,011.84. False declaration in voluntary registration for GST: GST registration is compulsory for businesses whose annual taxable turnover has exceeded $1 million, or is expected to exceed $1 million in the next 12 months. Businesses whose taxable turnover does not exceed $1 million may choose to register for GST on a voluntary basis. Seow is the soleproprietor of Geek Enterprise (formerly known as Etechz Solutions) dealing in wholesale import and export of computer component parts. In 2010, Seow applied to register his business for GST on a voluntary basis. In the GST Registration form, he made a false entry by stating that he would be making taxable supplies of $300,000 in the next 12 months, when he had no reasonable grounds for believing so given that he did not conduct any business at all.

Fraudulent claims in GST refunds and forged invoices:

GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim a refund of the difference from IRAS.

In his first GST return for the accounting period from 1 to 31 Jul 2010, Seow made false entries in his GST returns, resulting in net GST refund claims of $35,670.39 which he was not entitled to. In addition, Seow had also created two fictitious purchase invoices when IRAS requested for documents to support his claim for GST refunds. Claiming input tax on fictitious purchases is an offence. Offenders face a penalty of up to 3 times of the amount of tax undercharged and/or imprisonment up to 7 years. Seow pleaded guilty to 3 charges with one remaining charge taken into consideration for sentencing. Seow was sentenced to 6 weeks’ imprisonment and ordered to pay a penalty of $298,011.84, which is 3 times the amount of tax undercharged

Failure to display GST inclusive prices

20 Jul 2012: First retailer fined over failure to display GSTinclusive prices Silver River Furniture Pte Ltd (“Silver River”), a furniture retailer, is the first GST-registered business to be charged in court for not showing GST-inclusive prices at its premises and on its marketing materials. Silver River has to pay a total fine of $4,000 for four charges of failure to comply with GST (General) Regulations on price-displays. Another two similar charges were taken into consideration by the court for the purposes of sentencing.

GST-registered businesses must show GST-inclusive prices on all displays, advertisements, publications and quotations to the public, whether quoted verbally or in writing. The only exception is businesses in the hotel and food & beverage industries – they are allowed to display GST-exclusive prices for goods and services that are subject to service charge. Failure to display GST-inclusive prices to the public is an offence and carries a fine of up to $5,000.

Following a tip-off from a member of the public, IRAS conducted investigations into the alleged offences and found that two of Silver River’s advertisements in the Straits Times on 28 Jan and 4 Feb 2012 showed pictures of furniture and prices together with a small print stating ‘All prices exclude delivery & GST’.

When our officers visited Silver River’s showrooms at 5 Little Road Comtex Industrial Building on 31 Jan 2012, we found that Silver River had displayed GST-exclusive prices for some of its items and price displays that carried the statement ‘All prices are exclusive of GST’ in small print. An advertisement that was posted on Silver River’s website in Feb 2012 had also not complied with the price display requirements under GST (General) Regulations.

This was not the first time that Silver River had contravened the GST price display requirements. Despite receiving a few warnings from IRAS for similar offences in the past, Silver River had repeatedly failed to comply with GST price display requirements. For the above offences, Silver River was found guilty of four charges for failing to show prices inclusive of GST on its advertisements, at its showroom premises and on its company website and was ordered to pay a total fine of $4,000.

Fraudulent GST claims by a GST registered business

4 Jul 2012: Company manager jailed for GST fraud 39-year-old Tan Seng Beng Joseph (“Joseph”), the manager of AFGB Pte Ltd (“AFGB”), was sentenced to one week’s jail and a penalty of $78,974.34 for helping his firm to make fictitious entries in the GST returns and fraudulently claimed $26,324.78 in GST refunds.

GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim the difference as GST refund from IRAS.

Claiming input tax on fictitious purchases is an offence. Offenders face a penalty of up to 3 times of the amount of tax undercharged and/or imprisonment up to 7 years. AFGB is in the business of wholesale trading. Joseph, with wilful intent to defraud GST, overstated the input tax in AFGB’s GST returns for periods ended 31 May 2009 and 30 Sep 2009, resulting in net GST refund claims of $26,324.78. Joseph pleaded guilty to two charges. Joseph was sentenced to one week’s imprisonment on each charge, with sentences to run concurrently. He was also ordered to pay a penalty of $78,974.34, which is 3 times the amount of tax undercharged.

IRAS takes a serious view of GST-registered businesses that wilfully make false claims for GST refunds or undercharge GST on sales. Tax evasion is a criminal offence punishable under the law and the Court imposes severe penalties for such offences. Businesses or individuals should disclose any past tax evasion immediately. IRAS will treat such disclosure as a mitigating factor when considering the penal charges.

Omission of collection of GST by a GST registered business

29 Oct 2014: Construction company and director fined for omitting GST on property sale

A construction company and its director were each ordered by the court to pay a penalty of $191,268 – two times the amount of GST evaded – and a fine of $2,000 for failing to account for GST on the sale of a property at Woodlands Industrial Park. Junling Construction & Engineering Pte Ltd (“Junling Construction & Engineering”) and its director, Cheah Wai Fun, 52, were charged for not reporting the amount of GST collected from the sale of a property in the company’s GST return in 2011.

Offence to omit output tax on sale of non-residential property: IRAS’ investigations revealed that Junling Construction & Engineering sold a non-residential property at Woodlands Industrial Park on 9 Feb 2011. The buyer paid Junling Construction & Engineering $1.38 million for the property and $96,600 for the 7% GST on the selling price. Cheah Wai Fun, who was responsible for filing GST returns and issuing tax invoices for Junling Construction & Engineering, did not account for the $96,600 collected as an output tax in the company’s GST return for the accounting period ended 31 Mar 2011. As the director of Junling Construction & Engineering, Cheah Wai Fun had failed to ensure the accuracy of Junling Construction & Engineering’s GST return.Together, Junling Construction & Engineering and Cheah Wai Fun have to pay a total penalty of $382,536 and total fine of $4,000 for the GST offence.

Charging and Accounting for GST: Businesses may buy and sell properties in the course of their business. Under the GST law, GST-registered businesses have to account for GST collected on the sale of non-residential properties as an output tax in their GST returns. They can also claim the GST paid on the purchase of non-residential properties as an input tax in their GST returns.

Penalties for Making Incorrect GST Return: It is a serious offence to omit or understate output tax on sales. Offenders face a penalty that is double the amount of tax undercharged, and a fine not exceeding $5,000 or imprisonment of up to 3 years or both.

GST 2015005

Fraudulent GST claims by a GST registered business

8 November 2011: Records were burnt but IRAS uncovers GST fraud

Mr Tan Kim Teck (“Tan”) thought he could shake IRAS off his trails by burning his business records to destroy evidence of fraud, but IRAS brought him to task for creating false GST claims to defraud the Comptroller of GST. Tan was sentenced to eight months and two weeks’ jail, as well as fined $413,880 in court.

No time-limit on fraud charges: Tan was charged in court with intent to evade tax via TKT Trading (“TKT”) to defraud the Comptroller of GST of $219,596.42 in taxes over an eightyear period from 2000 to 2007. He had made fictitious entries in 29 GST returns and failed to keep proper records as required under the law1.

IRAS can take to task tax evaders for periods beyond the seven-year statutory time-bar where fraud has been committed.

Tan began his business as the sole-proprietor of TKT in 1996. The principal business of TKT is wholesale of parts and accessories for vehicles. He registered for GST in 1998 and was responsible for submitting the GST declarations for TKT since registration.

Fictitious GST entries and destruction of evidence: GSTregistered persons can offset the GST they pay on their purchases against the GST they charge on sales, and pay the net difference to IRAS. If a business incurs more GST on purchases than it collects from sales, it can claim a refund of the shortfall from IRAS. Refunds can arise in exports, because exports are zero-rated (i.e. the business need not collect GST on exports) but the GST is incurred on purchases. Businesses can only claim input tax if they have indeed exported the goods, incurred the GST on purchases and also satisfied the essential conditions for making claims. Businesses may refer to www.iras.gov.sg for details. Subsequently, Tan admitted that he had obtained fraudulent refunds from the Comptroller of GST due to greed.

IRAS’s investigations revealed that Tan had declared fictitious input tax claims in his GST returns from September 2000 to September 2007, by adding transhipments goods of TKT (these goods were transferred from importing vessels to the exporting vessels and therefore, did not enter Singapore) into the GST returns under the value of taxable purchases when in fact, no GST was incurred. Investigations further revealed that Tan had burned the physical copies of the records so as to impede IRAS’s investigations when he realised that IRAS requested records to assess the amount of tax undercharged.

Tan, the sole-proprietor of TKT, pleaded guilty to the 11 charges of creating false entries in his GST returns to evade tax, and 3 charges for destruction of supporting documents. 18 charges of creating false entries were taken into consideration for sentencing. He faced a penalty of $413,880, which is 3 times the amount of tax undercharged

29 Jul 2011: Company and Director charged in court for GST fraud

Suharry Bin Abdullah (“Suharry”), the director of a beverage company, Republic Beverages Company Private Limited (“RBC”) was sentenced to 4 months’ jail and ordered to pay a penalty of $140,023.59 for creating false GST entries and fictitious invoices to defraud the Comptroller of GST. RBC was fined $40,000 and ordered to pay the same amount of penalty. False GST claims and fictitious invoices: GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim a refund of the difference from IRAS. Started in 2006, RBC is a company that engages in supply and distribution of beverages. Suharry made false entries in RBC’s GST returns from March 2008 to August 2008, resulting in net GST refund claims which he was not entitled to. The total amount of false GST claims was $32,158.98. In addition, Suharry had also created 6 fictitious purchase invoices when IRAS requested for supporting documents. IRAS also uncovered that Suharry had forged the 6 suppliers’ invoices in his attempt to mislead IRAS into thinking his GST refund claims were genuine. The total amount of GST involved for the forged invoices is $20,394.64. Claiming input tax on fictitious purchases is an offence. Offenders face a penalty of up to 3 times of the amount of tax undercharged and/or imprisonment up to 7 years.

Suharry and RBC faced 8 charges each. Suharry pleaded guilty to 10 of the charges. The remaining 6 charges were taken into consideration for sentencing. Suharry was sentenced to 4 months imprisonment and ordered to pay a penalty of $140,023.59, which is 3 times the amount of tax undercharged.

Fraudulent GST claims by a non GST registered business

12 Nov 2010: Restaurant and director fined for unauthorised collection of GST

A Brazilian restaurant and its director were fined $92,000 respectively in court today for collecting GST from its customers when the restaurant is not registered for GST.

Casa Do Churrasco Pte Ltd (“Casa”) and its director, Fabiane Mendes Braga (“Fabiane”), 35, faced 283 charges each for unauthorised collection of GST over the period December 2008 to October 2009. This is the second case of unauthorised GST collection that IRAS has brought the offender to court.

Unauthorised collection of GST: All businesses are required to register with IRAS before charging and collecting GST. Charging and collecting GST without being registered with IRAS is a serious offence. Offenders can be fined up to $10,000 and/or jailed up to 3 years for each offence of unauthorised GST collection.

Casa is a Brazilian steakhouse and bar that started operations in December 2008. Casa did not register for GST but it continued to charge and collect GST from its customers over an 11-month period. The GST collected from customers was not reported to IRAS. When IRAS received information of Casa’s malpractices, IRAS officers visited the premises in October 2009 and seized Casa’s business records and sales receipts. Sales receipts dated since December 2008 with GST charged were found amongst Casa’s business records. The total GST that was collected by Casa from its customers that was not declared and accounted to IRAS amounted to $38,084.58.

Fabiane, the director representing Casa, pleaded guilty to the 92 charges proceeded on Casa and herself. The amount of GST wrongfully collected for the 92 charges is $11,247.86. Another 191 charges were taken into consideration for sentencing.

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Fraudulent GST claims by a GST registered business

4 Jun 2010: Company director jailed for GST fraud Tang Ee Boon (“Tang”), 32, the managing director of V-Teb Services Pte Ltd (“V-Teb”) was convicted of GST fraud amounting to $327,837.49 and was sentenced to 12 months’ jail.

Tang was brought to court for 21 charges of making inflated and false claims of GST refunds for the period 1 Jan 2004 to 30 Jun 2007.

GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim the difference as GST refund from IRAS.

IRAS records indicate that V-Teb provides cleaning services locally. Hence, the company is not expected to claim GST refunds. However, IRAS’ tax auditors noted that Tang, as the managing director of V-Teb, had submitted increasing amounts of GST refund claims in the GST returns on a frequent basis. Upon verifying the value of V-Teb’s taxable purchases with the alleged suppliers, IRAS auditors found that Tang had, over a period of 3 years, inflated the input tax claims in the GST returns in order to obtain inflated GST refunds from IRAS. Further investigations also revealed that Tang had failed to account for GST collected from V-Teb’s customers from 2004 to 2006. Tang also fabricated the amounts of taxable purchases and supplies in V-Teb’s GST returns.

Tang pleaded guilty to a total of 14 charges of evading GST, comprising three charges of understating output tax, eight charges of overstating input tax, and three charges of making false entries in V-Teb’s GST returns. In addition to the jail term, the court also ordered Tang to pay a penalty of $983,512.47, which is three times the amount of GST undercharged. The remaining charges were taken into consideration in sentencing.

15 Oct 2014: Four Men Fined and Sentenced to Jail for Fraudulent GST Tourist Refund Claims

Four Indian nationals – Sundar Panneer Selvam (age 46), Baskaran Uthirapathy (age 28), Pounraj Natarajan (age 25), and Gobi Raman (age 31) – were convicted of offences that include fraudulent Goods and Services Tax (GST) tourist refund claims and corruption. They were also found guilty of money laundering by removing monies gained from the fraudulent GST refunds from Singapore.

Modus Operandi – Fraudulent GST Refund Claims and Corruption offences: The Inland Revenue Authority of Singapore (IRAS), using its data analytics tool, detected several suspicious GST refund claims through the electronic tourist refund scheme (eTRS) [i] in 2013. Subsequent investigations by IRAS, Singapore Customs and Corrupt Practices Investigation Bureau (CPIB) revealed fraudulent claims of about $570,000 in GST refunds by a group of accomplices between September 2012 and January 2014. As part of their illegal scheme, Sundar Panneer Selvam, Baskaran Uthirapathy, Pounraj Natarajan and Gobi Raman paid for receipts from bona fide shoppers who had purchased jewellery and obtained eTRS tickets from the jewellery retailers. On various occasions during the offence period, the four Indian nationals presented to Mohamed Yusof Bin Abdul Rahman, a Customs officer on duty at the Inspection Counter in the airport, the eTRS tickets and jewellery that were not purchased by them or used gold-plated jewellery which did not match the goods description on the eTRS tickets to support their eTRS claims. They admitted in court that they had given bribes to the Customs officer so that they could obtain approval for their false GST refund claims. The four Indian nationals then presented the approved eTRS notification slips at the Central Refund Counter, located in the airport’s departure transit lounge, to receive their GST refunds in cash. The case against Mohamed Yusof will be heard again in court on 6 November 2014 at 9.00a.m. He is no longer employed by Singapore Customs following the expiry of his employment contract in September 2014.

Removing Criminal Proceeds arising from Fraudulent GST claims from Singapore:

Fraudulent GST tourist refund claims

15 Oct 2014: Four Men Fined and Sentenced to Jail for Fraudulent GST Tourist Refund Claims

Four Indian nationals – Sundar Panneer Selvam (age 46), Baskaran Uthirapathy (age 28), Pounraj Natarajan (age 25), and Gobi Raman (age 31) – were convicted of offences that include fraudulent Goods and Services Tax (GST) tourist refund claims and corruption. They were also found guilty of money laundering by removing monies gained from the fraudulent GST refunds from Singapore.

Modus Operandi – Fraudulent GST Refund Claims and Corruption offences: The Inland Revenue Authority of Singapore (IRAS), using its data analytics tool, detected several suspicious GST refund claims through the electronic tourist refund scheme (eTRS) [i] in 2013. Subsequent investigations by IRAS, Singapore Customs and Corrupt Practices Investigation Bureau (CPIB) revealed fraudulent claims of about $570,000 in GST refunds by a group of accomplices between September 2012 and January 2014. As part of their illegal scheme, Sundar Panneer Selvam, Baskaran Uthirapathy, Pounraj Natarajan and Gobi Raman paid for receipts from bona fide shoppers who had purchased jewellery and obtained eTRS tickets from the jewellery retailers. On various occasions during the offence period, the four Indian nationals presented to Mohamed Yusof Bin Abdul Rahman, a Customs officer on duty at the Inspection Counter in the airport, the eTRS tickets and jewellery that were not purchased by them or used gold-plated jewellery which did not match the goods description on the eTRS tickets to support their eTRS claims. They admitted in court that they had given bribes to the Customs officer so that they could obtain approval for their false GST refund claims. The four Indian nationals then presented the approved eTRS notification slips at the Central Refund Counter, located in the airport’s departure transit lounge, to receive their GST refunds in cash. The case against Mohamed Yusof will be heard again in court on 6 November 2014 at 9.00a.m. He is no longer employed by Singapore Customs following the expiry of his employment contract in September 2014.

Removing Criminal Proceeds arising from Fraudulent GST claims from Singapore:

After receiving the GST refunds in cash, the four Indian nationals spent a portion of the cash on duty-free items at the airport, before departing Singapore for India on the same day with the remaining cash.

Court Sentences: Sundar Panneer Selvam was sentenced to a total of 48 months’ imprisonment and a penalty of $292,977.33.

Zero Tolerance towards Tax Fraud, Corruption and other Criminal Activities: Singapore has always adopted a zero tolerance approach towards tax fraud, corruption and other criminal activities. The authorities take a serious view of any corrupt and criminal practices, and will not hesitate to take swift action against any individuals and parties involved.

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Fraudulent GST tourist refund claims

25 Sep 2014: Six Charged for Corrupt and Fraudulent GST Tourist Refund Claims

1. Six men have been charged in Court in a corrupt and fraudulent Goods and Services Tax (GST) tourist refund claims case. They include a former Singapore Customs officer, a Singaporean sales executive employed with a goldsmith shop and four Indian nationals.
2. Using a data analytics model that identifies abnormal GST refund claims via the electronic tourist refund system (eTRS)i, Inland Revenue Authority of Singapore (IRAS) had detected several suspicious GST refund claims. IRAS and Singapore Customs then worked together to investigate the suspicious GST refund claims processed by the Customs officer involved. The case was subsequently referred to the Corrupt Practices Investigation Bureau (CPIB) for further investigations. Singapore Customs and IRAS then worked closely with CPIB to support the investigations into the case.
3. On 27 January 2014, CPIB, Singapore Customs and IRAS conducted a joint operation to arrest the Customs officer and four Indian nationals. The sales executive was arrested by CPIB later the same day. The Commercial Affairs Department (CAD) of the Singapore Police Force (SPF) was subsequently alerted due to suspected money laundering offences. The Customs officer involved is no longer employed by Singapore Customs. His employment contract was not renewed when it expired earlier this month.
4. On 25 September 2014 at Court 26, the six men involved in the case were charged with the following offences:
   1. Former Singapore Customs Officer, Mohamed Yusof Bin Abdul Rahman
      1. 29 counts of corruptly accepting gratification amounting to S$11,400.00, an offence under Section 6(a) of the Prevention of Corruption Act, Chapter 241; and
      2. 103 counts for an offence under Section 62(1)(b) of the Goods and Services Tax Act for intentionally assisting Sundar Panneer Selvam, Baskaran Uthirapathy, Pounraj Natarajan and Gobi Raman to fraudulently claim a total of $493,858.67 in GST refunds.
   2. Sales executive employed with Soon Huat Goldsmith Pte Ltd, Lim Pheck Aun
      1. Two counts of corruptly accepting gratification amounting to $400.00, and seven counts of corruptly accepting gratification in the form of DOM Liquors, an offence under Section 6(a) of the Prevention of Corruption Act, Chapter 241; and
      2. 23 counts under Section 62(1)(b) of the Goods and Services Tax Act for assisting Sundar Panneer Selvam and Baskaran Uthirapathy to fraudulently claim $23,116.50 in GST refunds by making false entries in the eTRS system.
   3. Indian National, Sundar Panneer Selvam
      1. 29 counts of corruptly giving gratification amounting to $10,800.00 and seven counts of corruptly giving gratification in the form of DOM Liquors, an offence under Section 6(b) of the Prevention of Corruption Act, Chapter 241;
      2. 30 counts for an offence under Section 62(1)(b) of the Goods and Services Tax Act for wilful intent to fraudulently claim GST refunds amounting to $213,007.34; and iii. Nine counts of removing cash arising from fraudulent GST refund claims out of Singapore under Section 47(1) (b) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, Chapter 65A.
   4. Indian National, Baskaran Uthirapathy
      1. 11 counts of abetting Sundar Panneer Selvam and Pounraj Natarajan to corruptly give gratification to Mohamed Yusof Bin Abdul Rahman amounting to $3,550.00, and one DOM Liquor and $400.00 to Lim Pheck Aun, an offence under Section 6(b) read with Section 29(a) of the Prevention of Corruption Act, Chapter 224;
      2. 33 counts for an offence under Section 62(1)(b) of the Goods and Services Tax Act for wilful intent to fraudulently claim GST refunds amounting to $98,273.64; and
      3. 11 counts of removing cash arising from fraudulent GST refund claims out of Singapore under Section 47(1)(b) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, Chapter 65A.
   5. Indian National, Pounraj Natarajan
      1. Five counts of corruptly giving gratification amounting to $1,300.00 to Mohamed Yusof Bin Abdul Rahman through Sundar Panneer Selvam and Baskaran Uthirapathy, and one count of corruptly giving gratification amounting to $250.00 to Mohamed Yusof Bin Abdul Rahman, an offence under Section 6(b) of the Prevention of Corruption Act, Chapter 241;
      2. 30 counts for an offence under Section 62(1)(b) of the Goods and Services Tax Act for wilful intent to fraudulently claim GST refunds amounting to $114,990.51; and
      3. 11 counts of removing cash arising from fraudulent GST refund claims out of Singapore under Section 47(1)(b) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, Chapter 65A.
   6. Indian National, Gobi Raman
      1. 26 counts for an offence under Section 62(1)(b) of the Goods and Services Tax Act for wilful intent to fraudulently claim GST refunds amounting to $143,359.63; and
      2. Nine counts of removing cash arising from fraudulent GST refund claims out of Singapore under Section 47(1)(b) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, Chapter 65A.
5. 5. Singapore has always adopted a zero tolerance approach towards corruption and other criminal activities. The authorities take a serious view of any corrupt and criminal practices, and will not hesitate to take swift action against any individuals and parties involved.

16 Sep 2011: Tourist Found Guilty of False GST Claims

Mr Hung Yat Sing, a 46-year-old from Hong Kong was found guilty of tourist refund fraud. Hung pleaded guilty to four charges of making false declarations in order to claim Goods and Services Tax (GST) of $5,481 on pearl necklaces and bracelets that were not purchased by him. Five remaining charges were taken into consideration for sentencing. Hung was found guilty of making false GST claims and fined $16,000 or, in default, 64 days’ imprisonment.

On 12 June 2011, Hung submitted his Tourist Refund Scheme (TRS) claim forms at the GST Tax Refund Inspection Counter at the Changi Airport and declared himself as the purchaser of the pearl necklaces and bracelets. The GST claimed, nett of a service charge imposed by the central refund agency, was refunded to Hung. IRAS interviewed Hung on his GST refund claims when he re-entered Singapore as a tourist subsequently. Hung admitted that he had falsely claimed the GST refunds in acting as a carrier to bring goods out of Singapore, and that he had claimed the GST refunds to earn a commission.

Tourist Refund Scheme:

The TRS is available only to tourists to claim GST refund on goods they have purchased and brought out of Singapore. Persons who have not purchased the goods and yet sought or obtained approval for a refund under the TRS would have committed an offence under the GST Act. More information on the Tourist Refund Scheme is available at www.iras.gov. sg > GST > For consumers. Compliance with the Tourist Refund Scheme: The Inland Revenue Authority of Singapore takes a serious view of foreigners who make false declarations to seek a refund under TRS and abuse the scheme. Strong enforcement measures, including prosecution, will be taken against such offenders. When convicted, offenders can be fined up to $5,000 or, in default, jailed up to six months for the offence

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Fraudulent GST tourist refund claims

21 Dec 2012: Two Caught for Fraud in Tourist Refund Claims

Mr Shadadpuri Jerome Dasigao (“Jerome”) and Miss Naguit Jennifer Cumadre (“Jennifer), both citizens of the Philippines, were found guilty of tourist refund fraud. Jerome pleaded guilty to seven charges of forging receipts and generating false electronic tourist refund scheme (“eTRS”) tickets to claim GST refund of $14,376.56 via the eTRS.

Jennifer pleaded guilty to one charge of presenting false receipts and eTRS tickets in order to claim GST refund of $2,043.87 on jewellery that were not purchased by her. They were found guilty of making false GST claims at court today. Jerome was sentenced to 12 months’ imprisonment and a penalty of $43,129.68, which is three times of the amount of tax defrauded. Jennifer was ordered to pay a penalty of $6,131.61 and a fine of $2,000 or, in default, 8 days’ imprisonment.

The Electronic Tourist Refund Scheme (eTRS):

Tourists can claim GST refund on goods they have purchased and brought out of Singapore. A person who did not purchase the goods and yet sought or obtained a GST refund under the tourist refund scheme would have committed an offence under the GST Act.

The eTRS was introduced in May 2011. The eTRS system simplifies the claiming of GST refund for tourists and also allows IRAS to detect any unusual claim promptly. Under eTRS, a tourist receives a receipt of goods purchased and an eTRS ticket when he buys goods from a GST-registered retailer participating in eTRS. The tourist then uses the eTRS ticket or the credit card with which he purchased the goods to make a GST refund claim via the eTRS self-help kiosk at the Changi airport. As a control measure, physical inspection of the goods may be carried out at the GST refund counter by Singapore Customs officers before a GST refund claim is approved.

Fraudulent GST refund claims:

Jerome was working as a customer service assistant with Goldheart Jewellery Pte Ltd’s outlet at the ION Orchard Shopping Centre. Investigations revealed that Jerome was the mastermind behind a syndicate for defrauding GST refund via the eTRS.

Between Nov 2011 and Oct 2012, Jerome gained unauthorised access to the computer system at the jewellery outlet at the ION Orchard Shopping Centre and printed hardcopy receipts of genuine transactions to generate false eTRS tickets. He also created false receipts and gave them to his Filipino accomplices so that they could make fraudulent claims for GST refunds at the airport before leaving Singapore.

As part of his scheme to convince officials into believing that the goods were indeed brought out of Singapore, Jerome also purchased fake jewellery that matched the description of jewellery printed on the receipts. In total, about $37,000 GST refunds were claimed over 20 occasions between Nov 2011 and Oct 2012 by eight of his accomplices. He was sentenced to 12 months’ imprisonment and a penalty of $43,129.68, which is three times of the amount of tax defrauded. Jennifer was one of the accomplices in Jerome’s scheme to claim GST refunds on goods that were not purchased by her. On 30 Oct 2012, Jennifer made a GST refund claim via the eTRS self-help kiosk at the Changi Airport and declared herself as the purchaser of the jewellery items. She was using the fraudulent receipts and invalid eTRS tickets from Goldheart Jewellery Pte Ltd that Jerome passed to her to make the GST refund claim. She presented the fake jewellery when her GST refund claim was identified by the computer system for physical goods inspection.

Jennifer was ordered to pay a penalty of $6,131.61, which is three times of the amount of tax defrauded, and a fine of $2,000 or, in default, 8 days’ imprisonment.

14 Jul 2011: Paying for their own folly – three men arrested for cheating on the Tourist Refund Scheme Two male Indian nationals – Pakkiri Mohamed Abdul Karim, 43, and Perumal Sugumaran, 42 – and a Singaporean man, 74, were arrested for cheating on the Tourist Refund Scheme by conspiring to retain 11 pieces of “Goods and Services Tax (GST) refunded” jewellery in Singapore. Pakkiri and Perumal were each sentenced to a Court fine of $3,000 or, in default, three weeks’ imprisonment. Investigations are still ongoing for the Singaporean offender. The jewellery involved was worth more than S$18,000, with GST exceeding $1,000.

On 6 June 2011, Pakkiri approached Customs Officers at the GST Refund counter at the transit area of Singapore Changi Airport Terminal 2, holding a pouch containing 11 pieces of jewellery and their purchase receipts. He was scheduled to depart for India later that day. After collecting the GST refund for the jewellery, Pakkiri proceeded to the transit area and handed over the pouch to a Singaporean man, who was later found to be holder of an airport access pass. Pakkiri then left for the boarding area, after tearing and disposing the receipts.

The Singaporean man placed the pouch inside his pocket and left the transit area. He then proceeded to the Departure Hall, where he was joined by Perumal. Sensing that something was amiss, Immigration & Checkpoints Authority officers moved in to check on them, and found the pouch of jewellery on Perumal. He was arrested immediately. The Singaporean man and Pakkiri were also apprehended. Investigations by Singapore Customs revealed that Pakkiri had planned to leave the jewellery with Perumal, and to collect it back on the following Friday upon his planned return to Singapore. Aware that he was not allowed to bring goods into Singapore after the GST claims for such goods had been made, he sought help from the Singaporean man to hand over the jewellery to Perumal.

2 Mar 2015: Ex-jewellery shop employee sentenced to two years’ jail for corruption and abetting in GST tourist refund fraud

Lim Pheck Aun (“Lim”), a former jewellery shop employee, was sentenced to 2 years’ jail and ordered to pay a total penalty of $27,893.59 for corruption and abetting two Indian nationals to fraudulently claim Goods and Services Tax (GST) tourist refund. Facts of the Offences

Lim was a salesman at Soon Huat Goldsmith Pte Ltd (“SHGPL”), a retailer participating in the electronic tourist refund scheme (“eTRS”), during the offence period. His duties as a salesman included issuing eTRS tickets to tourists to claim GST refunds.

On various occasions between May 2013 and Jan 2014, Lim assisted two Indian nationals, Sundar Panneer Selvam (“Sundar”) and Baskaran Uthirapathy

(“Baskaran”), to claim for GST refunds that they were not entitled. Lim had made false entries into the eTRS system to generate eTRS tickets with their particulars with the knowledge that Sundar and Baskaran were not the buyers of the jewellery described in the SHGPL receipts presented to him. In return, Lim accepted DOM Liquors and cash as bribes.

The GST fraud was uncovered when the Inland Revenue Authority of Singapore (IRAS) detected several suspicious GST refund claims in the eTRS system in late 2013. Subsequent joint investigations by IRAS, Singapore Customs and Corrupt Practices Investigation Bureau (CPIB) revealed that a group of accomplices had made fraudulent GST refund claims. Earlier, the other accomplices have upon conviction been jailed between three and five years and ordered to pay penalties for their offences.

Court Sentences

Lim faced a total of 23 GST evasion charges that amounted to $23,116.50 and 9 corruption charges that amounted to $724.

He pleaded guilty to 6 GST evasion charges and 3 corruption charges that were proceeded against him. The 6 GST evasion charges involved a total amount of $9,056.53 and the 3 corruption charges involved a total amount of $292.90.

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GST evasion by a GST registered business

20 Mar 2015: Sole-proprietor sentenced to 8 weeks’ jail for GST evasion

Avan Yong Yan Hwa (“Yong”), a sole-proprietor buying and selling mobile phones and accessories under the business name “HomeGround Trading”, was sentenced to eight weeks’ jail for under-reporting the Goods and Services Tax (GST) collected in his GST returns. He was also ordered to pay a penalty of $109,102.77, three times the amount of GST evaded.

Under-reporting of GST

IRAS detected anomalies in the declarations made by Yong in his GST returns during its regular audits of GSTregistered businesses. IRAS’ investigations revealed that Yong had deliberately omitted to account for the GST collected (or output tax) from his customers in nine GST monthly returns for November 2011, and from January 2012 to August 2012. He had issued manual invoices to some customers instead of the usual computerised ones, with wilful intent to exclude these sales amounts and corresponding GST collected in his GST returns to IRAS. The total GST amount under-declared was $53,433.80.

Charges Against Sole-proprietor

Yong faced a total of nine GST evasion charges for underreporting $53,433.80 in his GST returns. He pleaded guilty to three charges, involving a total GST amount of $36,367.59. The remaining six charges were taken into consideration in the sentencing.

Severe Penalties for Fraudulent GST Claims

It is a serious offence to understate output tax on sales or claim input tax on fictitious purchases. Offenders face a penalty of up to 3 times the amount of tax undercharged, a fine not exceeding $10,000, and/or imprisonment of up to 7 years.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past tax mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken.

Abetting in fraudulent GST tourist refund claims

5 Feb 2015: Former Singapore Customs officer jailed 5 years for corruption and abetting in GST tourist refund fraud Mohamed Yusof Bin Abdul Rahman (“Yusof”), a 67-year old former Singapore Customs officer, has been sentenced to 5 years’ jail and ordered to pay a total penalty of $673,084.80 for corruption and abetting four Indian nationals to fraudulently claim Goods and Services Tax (GST) tourist refund.

Yusof was deployed at the GST Refund Inspection Counter in the airport during the offence period between January 2013 and January 2014. His duty was to process the GST refund claims made by tourists leaving Singapore. Yusof is no longer employed by Singapore Customs following the expiry of his employment contract in September 2014. Facts of the Offences

Investigations by Inland Revenue Authority of Singapore (IRAS), Singapore Customs and Corrupt Practices Investigation Bureau (CPIB) in late 2013 revealed that a group of accomplices had made fraudulent GST refund claims under the electronic tourist refund scheme (eTRS). On various occasions during the offence period, Yusof assisted four Indian nationals, Sundar Panneer Selvam, Baskaran Uthirapathy, Pounraj Natarajan and Gobi Raman, to fraudulently claim a total of $493,858.67 in GST refunds. He helped to approve their GST refund claims even though the jewellery produced did not match the goods description on the receipts. In return, Yusof received bribes in cash. The total amount of cash bribes that Yusof had received from them amounted to $11,400.00.

The four Indian nationals have since been sentenced to imprisonment terms of between 36 and 48 months and penalties amounting to three times of tax defrauded in October last year.

Court Sentences

Yusof pleaded guilty to 25 GST tax evasion charges and 7 corruption charges that were proceeded against him. The 25 GST tax evasion charges involved a total amount of $220,561.60 and the 7 corruption charges involved a total amount of $3,350.00.

The court sentenced Yusof to 5 years’ jail, a penalty of $11,400 for his corruption offences and $661,684.80 which is three times the amount of GST defrauded.

Abuse of MES by a GST registered business

8 Mar 2013: First Freight Forwarding Company fined for Misusing the Major Exporter Scheme

Kian Min Express Transport Pte Ltd, a freight forwarding company, is the first company to be charged for misusing its Major Exporter Scheme (“MES”) status to import goods without paying the Goods & Services Tax (GST). The court ordered the company to pay a fine of $24,000 on 12 charges of failure to comply with the MES’ conditions imposed by the Comptroller of Goods & Services Tax.

The Major Exporter Scheme (MES):

GST is payable on the importation of goods. MES is a scheme that allows GST-registered businesses to import non-dutiable goods without paying GST at the point of importation. This scheme is designed to ease the cash flow of businesses that substantially export the goods they import.

The approved MES business must comply with the following conditions:

1. Import only his own goods into Singapore;
2. Should not in any circumstances import goods into Singapore on behalf of an unauthorised third party; and
3. Must have control over the custody and possession of the goods imported into Singapore.

Failure to comply with MES conditions:

Kian Min Express used its MES status to enable two freight forwarders, Soon Brother’s Transport & Shipping Service (“SBT”) and Narita Carrier Logistic (“NCL”), to import goods into Singapore without paying GST from July 2007 to December 2008. The total amount of GST not paid on the goods imported by SBT and NCL was close to $4 million.

SBT and NCL are required to pay GST to Singapore Customs on importation of goods into Singapore. However, Kian Min Express helped SBT and NCL bring their goods into Singapore GST-free by using its MES status when it also did not have control over the custody and possession of those goods imported by SBT and NCL. Kian Min Express’ only role in the importation of the goods was to complete paper declarations of the MES permits to facilitate their import. In return, Kian Min Express charged SBT and NCL a fee for each of the MES permit declarations made on their behalf.

IRAS takes a serious view on abuse of MES:

Inland Revenue Authority of Singapore (IRAS) takes a serious view of taxpayers who do not comply with the requirements of the scheme or wilfully abuse the scheme, and will not hesitate to bring the offenders to court.

The abuse of the scheme by offenders who facilitate the import of goods belonging to unauthorised third parties without paying GST can lead to leakage to GST revenue.

GST evasion by a GST registered business

30 December 2011: An UnUsUal Oversight A local promoter and organiser of shows and other entertainment acts failed to ensure that its tax returns were accurate. Consequently, Unusual Entertainment Pte Ltd (“UEPL”) was found guilty of wrongly stating the output tax in its Goods and Services Tax (GST) returns, resulting in an underpayment of $502,922.27 in GST. UEPL was ordered to pay a penalty of $601,632.72 and a fine of $10,000.

UEPL pleaded guilty to four charges of under-declaration of GST without reasonable excuse. Four remaining charges were taken into consideration for sentencing. Wrong output tax amount submitted: GST-registered businesses must charge GST output tax on the sale of their goods and services at the prevailing GST rate. IRAS’ investigations revealed that UEPL had wrongly declared its output tax for 2005 and 2006. The discrepancy was noticed when IRAS investigators found that sales figures submitted by UEPL for income tax purposes did not tally with the sales figures reported for output tax for 2005 and 2006. Further checks revealed that UEPL had not included the GST collected on tickets sales for both years as output tax in its GST returns.

UEPL was aware that it was required to account for the GST on the tickets sales. Under the Ticket Sales Agreements signed with SISTIC1, it was clearly stated that the responsibility of accounting for GST on ticket sales lies with UEPL. However, UEPL failed to check the GST returns prepared by its tax agent, which resulted in incorrect tax returns. The total sales reported in the GST returns were much lower than the amount for ticket sales over the same period. For example, the sales revenue declared for 2005 income tax was $9,136,361.00, against the $2,810,668.00 declared as total sales in their GST returns in the same year. A comparison would have shown the vast difference between the two sets of figures (more than $6 million), when they should have been close, if not the same. Yet, the mistake went unnoticed as UEPL did not check its GST returns. As a result, UEPL had understated $502,922.27 of GST output tax.

UEPL also made similar under-declarations of output tax in other years. The total amount of tax and penalty involved is $983,859.90.

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Responsibility of a GST registered business

1. Charge and Account for GST on for Standard-Rated Supplies.
   For supplies of goods and services made in Singapore (standard-rated supplies), you need to charge and account for 7% GST.
2. File GST Returns and pay GST due on time
   All GST returns must be submitted via e-Filing (myTax Portal) within one month from the end of each accounting period.
3. Keep Proper Business and Accounting Records
   You need to keep all business and accounting records for at least five years.
4. Display Prices with GST
5. Issue Tax Invoices with GST Registration Numbers You are required to issue tax invoices for your standard-rated supplies.
6. Inform IRAS of Changes
   You need to inform the Comptroller within 30 days after any change to your business circumstances. e.g. change in business registered address or mailing address, business name, business constitution or ownership, change in partner(s) or particulars of partner(s), Set up of new partnerships business with the same composition of partners
7. Accounting for GST at Point of De-Registration
   When your GST registration is cancelled, you need to account for GST on business assets held on the last day of registration if GST was previously claimed on their purchase and the total market value of these business assets is more than $10,000. These assets include inventories, fixed assets, non-residential properties and goods imported under the various GST schemes.
8. Additional Obligations under Voluntary Registration. Those who voluntarily registered are required to:
   • Use GIRO for payment and/or refund of GST;
   • Remain GST-registered for at least two years;
   • Comply fully with the responsibilities of a GST-registered business;
   • Make taxable supplies within two years if you have not started making taxable supplies at the point of applying for GST registration;

The Comptroller may cancel the voluntary GST registration when any of the conditions are not met.

Fraudulent GST tourist refund claims

15 Jan 2016: Singapore PR Found Guilty of Tourist Refund Fraud

Zheng Da Fei (ᮧय़ᷢ), a Singapore Permanent Resident (“PR”), was found guilty of engaging the help of a tourist to claim GST refund under the Electronic Tourist Refund Scheme (“eTRS”)i for a luxury item purchased by his wife. The court sentenced Zheng Da Fei to a fine of $4,500 or, in default, three weeks’ imprisonment.

Facts of the Case

In May 2014, Zheng Da Fei approached a Chinese National tourist at the Singapore Changi Airport for assistance to claim a refund of the GST amounting to $2,911.21 from the purchase price of $44,500, for the watch bought by Zheng Da Fei’s wife in a store at Orchard Road.

Zheng Da Fei knew that, as Singapore PRs, neither he nor his wife was entitled to the GST refund. He was caught by the Singapore Customs officers who detected the fraudulent tourist refund claim at the airport.

Penalties for Tourist Refund Fraud

The Inland Revenue Authority of Singapore (IRAS) takes a serious view of any one who makes false declarations to seek GST refunds under the tourist refund scheme and abuse the scheme. IRAS works closely with Singapore Customs to uncover any attempt to defraud GST.

A person who engages another person to seek or obtain an approval for a refund under the tourist refund scheme would have committed an offence under the GST Act.

Offenders shall be liable on conviction to a fine not exceeding $5,000 and in default of payment to

The advantages of a simplified tax invoice

• Suits a cash based retail business that deals with small value transactions < $1,000
• Increase sales throughput and operational efficiency for walk-in customers by reducing the time and efforts at point of sale to input customer’s name and address
• A cleaner and simplified tax invoice without the need to print separately the amount excluding GST and the GST amount
• Further achieve reduction in consumables by minimizing the amount of printing

If you have not done any of the above or are
unsure of your GST responsibility, you may
wish to give us a call to provide assistance to
you on this.

Do you need to charge GST on your invoice for recovery of expenses ?

• Is the expense compensatory or punitive in nature?
• Did you incur the expense acting as an agent for your customer or supplier?
• Are you sure that you are acting as an agent in the contractual relationship?
• Did your customer/supplier directly contract for with a third party to incur the expense. Are they also liable and assume all the responsibilities and risks?
• Are your customer/supplier legally obliged to pay the third party?
• Can your customer/supplier decides/ chooses which third party you are to deal with and the nature, type, amount of expense to incur?
• Does the third party know your customer/ supplier?
• Is the ownership of the goods purchased from third party with your customer/ supplier?
• Is the recovery of expense ancillary to or form inputs to a primary zero-rated or exempt supply to your customer/supplier?
• Is the expense incurred a zero-rated or exempt supply? Are you only recovering this item and at cost from your customer or supplier?

If you have two or more “No” to the above
questions, it is highly likely that GST is
chargeable and you would need to collect
GST for the expense recovery.