SINGAPORE: Two men suspected to be involved in a Goods and Services Tax (GST) missing trader fraud will be charged on Tuesday (Aug 5).
Missing trader fraud is a fraudulent scheme targeting Singapore’s GST system. It typically involves fictitious transactions orchestrated by a network of individuals and businesses designed to claim GST refunds or avoid tax obligations illicitly, the Inland Revenue Authority of Singapore (IRAS) states on its website.
The two men are alleged to have fabricated sales to make claims from the tax authority, the Singapore Police Force and IRAS said in a joint news release on Monday.
The pair, aged 40 and 73, are said to have set up four shell companies and used them to operate a fraudulent business between November 2017 and April 2018.
The men allegedly sold goods from one company to the other companies at inflated prices, amounting to around S$181 million (US$140 million), the authorities said.
It is believed that the sales and purchases among the companies were sham transactions, created to facilitate the claiming of GST from IRAS, they added.
The two men will face four charges each of fraudulent trading.
The 40-year-old will have added charges in relation to his successful and failed attempts to deceive IRAS: three counts of attempted cheating, one of forgery and three of cheating.
He allegedly submitted three fraudulent GST refund claims to IRAS, in an attempt to cheat it into disbursing S$11.8 million.
He also purportedly forged a supplier’s invoice submitted to IRAS to get it to approve the GST registration application of one of the shell companies.
Separately, he made three fraudulent GST refund claims under the electronic tourist refund scheme by deceiving IRAS into disbursing a GST cash refund of more than S$140,000, when the purchases under the refund scheme did not take place.
If convicted of fraudulent trading, the men could face a jail term of up to seven years or a fine, or both, for each charge.
The 40-year-old could also face up to 10 years’ jail and a fine if found guilty of forgery. The penalty is the same for each charge of cheating or attempt to cheat.
“The police and IRAS take a serious stance against tax offences and will take stern enforcement action against perpetrators of such fraudulent arrangements,” the authorities said.
GST-registered businesses that claim input tax on any supply that they know or should have known to be part of a missing trader fraud arrangement will be denied input tax and be subjected to a 10 per cent surcharge on the input tax denied.
“Businesses are therefore strongly advised to perform due diligence checks and take appropriate actions to address the risks identified to avoid participating in transactions suspected to be part of a missing trader fraud arrangement,” they added.
Anyone convicted of taking part in a specified arrangement, knowing or having reasonable grounds to believe that their participation is for a fraudulent purpose, can be penalised with a fine of up to S$500,000 or up to 10 years’ jail, or both.
