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SINGAPORE – Two individuals are set to face charges on tuesday, August 5, in connection with a elegant Goods and Services Tax (GST) missing trader fraud, amounting to approximately S$181 million (US$140 million). The case highlights ongoing efforts to combat fraudulent schemes targeting Singapore’s tax system.
Understanding Missing Trader Fraud
Missing trader fraud involves a complex network of individuals and businesses engaging in fictitious transactions. These schemes are designed to illegally claim GST refunds or evade tax obligations,according to the Inland Revenue Authority of Singapore (IRAS).The fraud exploits loopholes in the GST system, creating a notable risk to public revenue.
Details of the Alleged Fraud
The Singapore Police Force and IRAS revealed that the two men, aged 40 and 73, allegedly established four shell companies between November 2017 and April 2018. These companies were used to conduct a fraudulent business operation centered around inflated sales transactions.
Authorities allege that goods were sold between the companies at artificially high prices,totaling S$181 million. These sales and purchases are believed to be sham transactions, created solely to facilitate the fraudulent claiming of GST refunds from IRAS.
Charges Filed
Both men will be charged with four counts of fraudulent trading. The 40-year-old faces additional charges related to attempts to deceive IRAS, including three counts of attempted cheating, one count of forgery, and three counts of cheating.
He is accused of submitting fraudulent GST refund claims totaling S$11.8 million and forging a supplier’s invoice to secure GST registration for one of the shell companies.Furthermore, he allegedly obtained over S$140,000 in fraudulent GST refunds through the electronic tourist refund scheme by falsely claiming purchases that never occurred.
Potential Penalties
If convicted of fraudulent trading, each man could face a jail term of up to seven years, a fine, or both, per charge. The 40-year-old faces a potentially longer sentence of up to 10 years imprisonment and a fine for forgery, as well as for each charge of cheating or attempted cheating.
Strong Stance Against Tax Offences
“The police and IRAS take a serious stance against tax offences and will take stern enforcement action against perpetrators of such fraudulent arrangements,” stated the authorities in a joint release. This case underscores the commitment to protecting the integrity of Singapore’s tax system.
Implications for Businesses
Businesses found to be claiming input tax related to missing trader fraud arrangements will have their claims denied and will be subject to a 10% surcharge on the denied amount. Authorities strongly advise businesses to conduct thorough due diligence checks to avoid inadvertently participating in such fraudulent schemes.
Individuals convicted of participating in a fraudulent arrangement, knowing or having reasonable grounds to believe it is for a fraudulent purpose, may face a fine of up to S$500,000, imprisonment for up to 10 years, or both.
