General Manager in Singapore Jailed for GST Fraud

by CFO Innovation Asia Staff, 10 July 2012

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topics:
Accounting and Regulations Tax

tags:
GST fraud tax evasion

The manager of Singapore-based AFGB Pte. Ltd. was sentenced to one week’s jail and a penalty of S$78,974.34 (US$62,162.83) for helping his firm to make fictitious entries in the GST returns and fraudulently claimed S$26,324.78 (US$20,720.16)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. Tan Seng Beng 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.

Tan pleaded guilty to two charges. He 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.

The Inland Revenue Authority of Singapore (IRAS) takes a serious view of GST-registered businesses that wilfully make false claims for GST refunds or under-charge 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.

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