Tan Teck Seng ("Tan"), a 61-year-old sole-proprietor of Tong Ann Co (“Tong Ann”), which is in the wholesale business of scrap, junk and waste, has been convicted of evading the Goods and Services Tax (GST) by making false entries in his quarterly GST returns between 2010 and 2012. Tan faced a total of 4 GST charges for omitting output tax on the taxable supplies that he made to 16 business entities by way of cash sales, which resulted in $195,558 of GST undercharged.

Tan is also the first person to be convicted for failing to issue tax invoices upon making taxable supplies to his GST-registered customer. Investigations revealed that Tan had failed to issue tax invoices to Lian Aik Enterprises Pte Ltd (“Lian Aik”) for 7 sale transactions amounting to $785,814 for the period between 2010 and 2013.

Court Sentences For the 4 charges under Section 62(1)(b) of the GST Act for making false GST entries with wilful intent to evade tax in his GST returns, the Court sentenced Tan to 32 weeks' jail, and ordered him to pay a penalty of $586,673, which is three times the amount of tax undercharged.

For the 7 charges under regulation 108 of the GST (General) Regulations for failing to issue tax invoices as a GST-registered trader, Tan was ordered to pay a total fine of $30,000.

IRAS' Audit Programme Uncovered the Offence

IRAS runs audit programmes across various industries to ensure tax compliance among individuals, businesses and the self-employed. Using data analytics and advanced statistical tools, IRAS is able to cross-check data and detect anomalies. This case was uncovered through one such audit programme.

Penalties for Non-Compliance

Failure to Issue Tax Invoices for GST-Registered Business

Under Regulation 10 of the Goods and Services Tax (General) Regulations (‘the Regulations”), a GST-registered taxable person under the Goods and Services Tax Act is required to provide tax invoices to its GST-registered customers when making taxable supplies to them. Failure to do so is an offence under regulation 108 of the Regulations, and offenders shall be liable on conviction to a fine not exceeding $5,000 and in default of payment, to imprisonment for a term not exceeding 6 months.

Fraudulent GST Claims

It is a serious offence to wilfully evade tax by submitting false GST returns such as by understating any output tax, overstating any input tax, excluding taxable supplies or including fictitious transactions. Upon conviction, offenders are liable to pay a penalty of three times the amount of tax undercharged and are liable to be punished with a fine not exceeding $10,000, and/or to imprisonment of up to 7 years.

With the endorsement of the enhanced sentencing framework for GST evasion by the High Court on 17 January 2022 following the case of PP v. Pua Om Tee, offenders will face a stiffer imprisonment sentence which takes into account the harm caused by the offender and his or her culpability, such as the quantum of tax evaded, the degree of planning and premeditation and sustained period of offending. The imprisonment term imposed for GST evasion under Section 62 of the GST Act may span the full range 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. Those who wish to disclose past mistakes or report malpractices can write to:

Email: [email protected]

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 have otherwise been lost. All payments are at the discretion of the Comptroller. IRAS will ensure that the identities of informants are kept strictly confidential.

Inland Revenue Authority of Singapore