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 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.

Lower Penalties for Voluntary Disclosures

IRAS is also aware that some businesses and individuals could be negligent or unaware of their tax obligations, resulting in mistakes. IRAS views such mistakes differently from tax evasion. In the spirit of encouraging voluntary compliance, IRAS imposes lower penalties for such mistakes disclosed voluntarily by taxpayers.

Those who wish to disclose past mistakes or evasion or report malpractices that might indicate tax evasion should write to:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987
Email: [email protected]

IRAS would ensure that the identities of informants are kept confidential.

Inland Revenue Authority of Singapore