Lau Giang Boon Eric (“Lau”) was sentenced to 8 weeks’ jail and a penalty of $127,170 for making fictitious entries in his GST returns and thereby fraudulently claiming $42,390 in GST refunds. Lau pleaded guilty to three charges of wilful intent to evade tax. Two other charges were taken into account for sentencing.

Inflating input tax claims

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 in the form of 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 a fine not exceeding $10,000, and/or imprisonment up to 7 years.

Lau is the sole-proprietor of Xcellence Comm, which was in the business of import, export, distribution, sales and servicing of IT and computer equipment. Lau had with wilful intent to defraud GST, inflated the input tax claims from 1 Apr 2007 to 31 Dec 2007, which resulted in net GST refund claims of $42,390.

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