6 men charged with alleged involvement in GST fraud involving S $ 114 million in bogus sales
SINGAPORE: Six men were charged on Wednesday August 4 with their alleged involvement in a missing goods and services tax (GST) fraud at a trader involving around S $ 114 million in bogus sales.
This is the first prosecution involving such fraud, Singapore Police (SPF) and the Inland Revenue Authority of Singapore (IRAS) said in a joint press release.
Missing Merchant Fraud occurs when a seller collects exit GST on goods sold but disappears without paying it to IRAS.
In the meantime, other parts of the supply chain continue to deduct GST claims on the purchases they have made. The products are then exported by the last seller in the chain.
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“Because the exports are zero-rated, the last seller does not collect GST on the exports but instead claims a refund from the IRAS on the GST paid on their purchases of goods.
“If the IRAS reimburses the latter seller, it will result in a loss for the state because the missing trader did not pay the GST he collected for his sale of goods at the start of the chain,” the authorities said. .
In some variations of this fraud, the same goods can be re-imported and re-exported multiple times, also known as “carousel fraud,” SPF and IRAS explained.
IRAS HAS RECEIVED GST CLAIMS OF UP TO NEAR $ 8 MILLION
In this specific case, a Singapore-incorporated company, Nagore Trading, allegedly sold high-value electronics products worth around S $ 114 million to various companies between February 2015 and January 2016.
Nagore, which is a GST registered company, charged GST on sales.
“Nagore is said to be a shell company with no real business activity and it has been used to generate purchase orders and sales invoices to support subsequent GST refund claims by exporters,” authorities said.
IRAS received claims for GST refunds amounting to nearly S $ 8 million from alleged Nagore sales.
Four men, allegedly behind Nagore’s fraudulent operations, have each been accused of being complicit in a fraudulent business and forging sales invoices.
If found guilty of knowingly participating in a fraudulent enterprise, the men each face a prison sentence of up to seven years, a fine of up to S $ 15,000, or both.
Another man has also been charged with allegedly helping two of these Nagore individuals to commit a forgery.
If found guilty of committing a forgery, the five men can be jailed for up to four years, a fine, or both.
Authorities also said another man, the director of two GST-registered Singapore-incorporated companies, has been charged with his alleged involvement in the forgery of accounts.
He allegedly facilitated the fraud by allowing two companies, Ten Directions and Forte Communications, to purchase non-existent goods in Nagore.
If found guilty of knowingly participating in a fraudulent business, he can face a prison sentence of up to seven years, a fine of up to S $ 15,000, or both.
He also faces a jail term of up to 10 years, a fine or both if convicted of falsifying accounts.
Police and IRAS said they took GST-defaulting merchant fraud seriously and “will take tough enforcement action against those making such arrangements.”
As of January 1 of this year, any GST registered business that claims input tax on any supply made to it that it knew or should have known was part of a missing commercial fraud arrangement , will be refused input tax and will also be subject to a 10 percent mark-up on the refused input tax.
“Companies are therefore strongly advised to perform due diligence checks and take appropriate action to deal with the risks identified in order to avoid participating in transactions suspected of being part of a missing merchant fraud arrangement. “, said the authorities.