1. Following investigations by the Commercial Affairs Department (CAD) and the Inland Revenue Authority of Singapore (IRAS), six persons were charged today for their alleged involvement in perpetrating a Goods and Services Tax (GST) Missing Trader Fraud involving approximately S$114 million in fictitious sales. This is the first prosecution involving such fraud.
2. In a typical GST Missing Trader Fraud arrangement, a group of businesses would form a supply chain where goods are sold through the chain. At each stop along the supply chain, the seller charges GST on the goods sold. The original upstream seller then disappears without paying the collected GST to IRAS, hence the term “Missing Trader”. In the meantime, the goods sold down the chain are exported by the last seller in the chain. Since exports are zero-rated, the last seller does not collect GST on the exports but instead claims a refund from IRAS on the GST paid on its purchases of goods. If IRAS refunds this last seller, it will result in a loss to the State because the Missing Trader did not pay the GST that he collected for his sale of goods at the start of the chain.
3. In some variations of the GST Missing Trader Fraud, the same goods can be re-imported and re-exported repeatedly; such arrangement is known as “carousel fraud”. See Annex A for an illustration of the GST Missing Trader Fraud.
4. In this case, a Singapore-incorporated GST-registered company, Nagore Trading Pte Ltd (Nagore) purportedly sold high-value electronic goods amounting to approximately S$114 million to various businesses between February 2015 and January 2016, and GST was charged on these sales. Nagore is alleged to be a shell company with no real business operations and it was used to generate purchase orders and sales invoices to support the subsequent GST refund applications by the exporters. IRAS received claims in GST refunds approximately amounting to close to S$8 million, arising from the purported sales generated by Nagore.
5. Four men are alleged to be behind Nagore’s fraudulent operations, and each of them have been charged under Section 340(5) of the Companies Act for being a knowing party to a fraudulent business, and Section 465 of the Penal Code for forgery of sales invoices. If convicted, they each face an imprisonment term of up to seven years, or a fine of up to S$15,000, or both, for the charge under Section 340(5) of the Companies Act, and an imprisonment term of up to four years, or with fine, or with both, for the charge under Section 465 of the Penal Code. A fifth man was also charged under Section 465 of the Penal Code for allegedly assisting two of these individuals operating Nagore in committing forgery. If convicted, he faces an imprisonment term of up to four years, or with fine, or both.
6. A sixth man, the director of two Singapore incorporated GST-registered companies, Ten Directions Enterprises Pte Ltd (Ten Directions) and Forte Communications Pte Ltd (Forte Communications), has also been charged under Section 340(5) of the Companies Act and Section 477A of the Penal Code for his alleged involvement in falsification of accounts. He is alleged to have facilitated the fraud by allowing the two companies to purchase non-existent goods from Nagore. If convicted, he faces an imprisonment term of up to seven years, or with fine, or with both, for the charge under Section 340(5) of the Companies Act, and an imprisonment term of up to 10 years, or with fine, or both, for the charge under Section 477A of the Penal Code.
7. The Police and IRAS take a serious view of GST Missing Trader Fraud and will take stern enforcement action against perpetrators of such arrangements.
8. In addition, from 1 January 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 also be subject to a 10% surcharge on the input tax denied. Businesses are therefore strongly advised to perform due diligence checks and take appropriate actions to address the risks identified to avoid participating in transactions suspected to be part of a Missing Trader Fraud arrangement. For more information, please refer to the e-Tax Guide “GST: Guide on Due Diligence Checks to Avoid Being Involved in Missing Trader Fraud (PDF, 664K)”.

Singapore Police Force
Inland Revenue Authority of Singapore

Annex A: Illustration of GST Missing Trader Fraud