Two men are set to be charged on Tuesday, August 5, for their suspected part in a “missing trader fraud.” This type of scheme is a serious crime that tries to cheat Singapore’s GST system. It utilises a network of individuals and companies to create fake transactions, enabling them to illegally claim GST refunds or evade tax payments.
According to a joint news release from the police and the Inland Revenue Authority of Singapore (IRAS), the two men, who are 40 and 73 years old, are believed to have used four fake companies.
They allegedly ran a fraudulent business between November 2017 and April 2018. They are accused of making up sales by selling goods from one of their companies to another at much higher prices. These fake sales added up to about S$181 million.
The authorities believe these were sham transactions created to facilitate the claiming of GST from the Inland Revenue Authority of Singapore (IRAS).
Both men will face four charges of fraudulent trading. The 40-year-old man has even more charges against him for trying to deceive IRAS. These include:
- three counts of attempted cheating
- one count of forgery
- three counts of cheating
He is accused of submitting three fake GST refund claims to IRAS, trying to get S$11.8 million.
He also allegedly forged a supplier′s invoice to get IRAS to approve one of his companies for GST registration.
On top of that, he is accused of making three fake GST refund claims through the electronic tourist refunds scheme. He tricked IRAS into giving out over S$140,000 in cash refunds for purchases that were never actually made.
Serious penalties for fraud scheme
If found guilty of fraudulent trading, both men could face a jail term of up to seven years, a fine, or both, for each charge. The 40-year-old man could be sent to jail for up to 10 years and fined for forgery, cheating, or attempted cheating.
The police and IRAS have said they are very serious about tax offences and will take stern enforcement action.
GST-registered businesses that claim input tax on any supply that they know or should have known to be part of a missing trader fraud arrangement will be denied input tax and be subjected to a 10 per cent surcharge on the input tax denied.
Anyone convicted of taking part in a specified arrangement, knowing or having reasonable grounds to believe that their participation is for a fraudulent purpose, can be penalised with a fine of up to S$500,000 or up to 10 years’ jail, or both.
