Wong Weng Hong, manager of LJK Famco - a GST-registered sole-proprietorship set up under the name of Chan Shen Cheong and in the business of general wholesale trade - was sentenced to 6 weeks’ jail and was also ordered by the Court to pay a penalty of $105,439.89, three times the amount of fraudulent GST refund claims made.

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. Businesses that incur more GST on purchases than they collect from sales can claim the difference from IRAS in the form of GST refunds.

Fictitious GST Refund Claims Uncovered by IRAS Auditors

It was during one of our regular audits that the auditor came across suspicious quarterly GST returns submitted under Chan’s name. Further investigation revealed that Wong Weng Hong had used Chan’s name to set up LJK Famco in 2008.

Wong Weng Hong had obtained Chan’s Singpass to e-file the GST returns of Chan. Wong Weng Hong admitted he was the person who had e-filed Chan’s GST returns with random figures, without having considered the genuine amount of purchases made by LJK. Information gathered from LJK’s suppliers also did not substantiate the input tax claims in LJK’s quarterly GST returns for accounting periods ended in Jan, Apr and Jul 2009.

Wong Weng Hong had wilfully with intent to fraudulently obtain GST refunds, declared fictitious figures in multiple GST returns to obtain GST refunds that he was not entitled to.

Severe Penalties for Fraudulent GST Claims

IRAS takes a serious view of tax criminals and will not hesitate to take stern action against those guilty of defrauding the State. It is a serious offence to claim input tax on fictitious purchases or to understate output tax on sales. Offenders face a penalty of three times the amount of tax undercharged, a fine of up to $10,000, and/or jail term of up to 7 years.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past tax mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken.

Cash Rewards for Informants

A reward based on 15% of the tax recovered, capped at $100,000, would be given to informants if the information and/or documents provided lead to a recovery of tax that would otherwise be lost. All payments are at the discretion of the Comptroller. IRAS will ensure that the identities of informants are kept strictly secret and confidential.

Those who wish to disclose past mistakes, reveal evaded taxes, or report malpractices that might indicate tax evasion, can email: [email protected] or write to IRAS at:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987