MISSING TRADER FRAUD
Perpetrators of the GST missing trader fraud seek to abuse the GST system to generate illegal proceeds through a string of false transactions, the police and IRAS said, adding that these false transactions are the basis of fraudulent GST refund claims made to IRAS.
Missing trader fraud happens when a seller collects GST from sales but does not pay the tax to IRAS. The seller is known as the missing trader.
Meanwhile, businesses further down the supply chain continue to claim refunds from IRAS for the GST paid on their purchases.
Tan and Yeo had admitted to using M_Solution Trading – a shell company with no real business – to perpetrate the fraud. Yeo also operated another company, Crescendo Hardware Trading as part of the same fraud. Sia was the nominee director of M_Solution Trading.
Between September 2015 and December 2015, Tan and Yeo forged 90 sales invoices issued by M_Solution Trading for the purported sales of goods amounting to approximately US$55 million.
These goods appeared to have been sold through chains of other business entities including Crescendo Hardware Trading and eventually to exporters, who made claims for GST refunds from IRAS.
“These sales were a sham and there were no genuine sales or deliveries,” SPF and IRAS said.
GST was also charged on these sales even though M_Solution Trading had only been GST-registered from Dec 1, 2015.
“These fictitious sales invoices were generated to support the subsequent GST refund claims submitted by the exporters.”
In total, Tan and Yeo’s actions resulted in the submission of fraudulent GST refund claims amounting to about S$7.53 million. Of that sum, IRAS had paid out about S$2.04 million in GST refunds.
The police and IRAS warned that they take a serious stance against GST missing trader fraud offences and that they would take stern enforcement action against perpetrators of such fraudulent arrangements.
From Jan 1, 2021, any GST-registered business that claims input tax on any supply made to them which it knew or should have known to be part of a missing trader fraud arrangement will be denied input tax and subject to a 10 per cent surcharge on the input tax denied.
The authorities strongly advised businesses to perform due diligence checks and take the appropriate actions to address the risk identified, in order to avoid participating in transactions suspected to be part of a missing trader fraud arrangement.
