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Man Charged For Perpetrating A $252 Million GST Missing Trader Fraud

Following investigations by the Commercial Affairs Department (“CAD”) and the Inland Revenue Authority of Singapore (“IRAS”), a 45-year-old man will be charged in court on 9 April 2024 for his suspected involvement in perpetrating a Goods and Services Tax (“GST”) Missing Trader Fraud involving approximately $252 million in fictitious sales. 

The man was the sole director and shareholder of a Singapore-incorporated GST-registered company.  Between October 2012 and June 2014, he allegedly operated a fraud through this company by trading in high-value electronic goods totalling approximately $252 million and then generating false invoices to support the subsequent GST refund claims by the exporters. The man is also believed to have forged invoices of suppliers to further perpetrate the fraud. 

The man also faces charges for allegedly making false entries in the company’s GST returns for the period between October 2012 and January 2014 to evade GST amounting to $4,262,041. 

For his alleged offences, he will be charged with: 

  1. two counts of offences under Section 340(5) read with Section 340(1) of the Companies Act (Chapter 50, 2006 Revised Edition) (“Companies Act”) for being a knowing party to a fraudulent business;

  2. one amalgamated count of offence under Section 465 of the Penal Code (Chapter 224, 2008, Revised Edition) (“Penal Code”) for forging suppliers’ sales invoices; 

  3. two amalgamated counts of offences under Section 477A of the Penal Code for falsifying his company’s sales invoices; and

16 counts of offences under Section 62(1)(b) read with Section 74(1) and punishable under Section 62(1)(i) and Section 62(1)(ii) of the Goods and Services Tax Act (Chapter 117A, 2005 Revised Edition) (“GST Act”).

If convicted, the man may face the following punishments:

  1. For each charge of fraudulent trading under Section 340(5) of the Companies Act, imprisonment for a term not exceeding seven years, a fine, or both;

  2. For each charge of forgery under Section 465 of the Penal Code, imprisonment for a term not exceeding four years, a fine, or both;

  3. For each charge of falsification of accounts under Section 477A of the Penal Code, imprisonment for a term not exceeding 10 years, a fine, or both; and

  4. For each charge of GST evasion under Section 62(1)(b) of the GST Act, imprisonment for a term not exceeding seven years, a fine, or both and a penalty of three times the amount of tax undercharged.

The Police and IRAS take a serious stance against GST Missing Trader Fraud offences and will take stern enforcement action against perpetrators of such fraudulent arrangements. Please refer to Annex A for more background and an illustration of the GST Missing Trader Fraud.

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 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”. 

Annex A: Illustration of GST Missing Trader Fraud

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 purportedly 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.

In some variations of the GST Missing Trader Fraud, goods can either be fictitious, or the same goods can be re-imported and re-exported repeatedly; such an arrangement is also known as “carousel fraud”.  See illustration below for an example of the GST Missing Trader Fraud.

20240408_man_charged_for_perpetrating_a_252_million_gst_missing_trader_fraud_1

 


SINGAPORE POLICE FORCE
INLAND REVENUE AUTHORITY OF SINGAPORE
08 April 2024 @ 3:05 PM
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