It was reported in the IRAS’ website on 11 April 2014 that Creative Engineering Works Pte Ltd (“CEWPL“) (UEN Local Number – 200308985G) has to pay $170,000 in taxes and penalty for failing to inform the Comptroller of Goods and Services Tax (“CGST”) that it needed to register for GST. CEWPL is also ordered by the court to pay a fine of $5,500. CEWPL is the second company to be charged in court in 2014 for such offences.
Through IRAS’ investigation, it was found that CEWPL’s taxable turnover for the four quarters ended 30 Jun 2005, 30 Sept 2005, 31 Dec 2005 and 31 Mar 2006 exceeded the $1 million threshold. However, it failed to inform the CGST of its liability to register for GST within 30 days of the end of the last quarter, i.e. 30 Apr 2006. Furthermore, CEWPL deliberately cancelled genuine invoices amounting to $599,389.77 to avoid registering for GST.
As such, CEWPL is required to pay $154,535.16 of GST that it did not account for between 1 Jun 2006 and 31 Dec 2008. Beyond this, CEPWL has to pay an additional penalty equal to 10% of the amount of the tax due. This amounted to $15,453.53. CEWPL was also fined $5,500 by the Court.
What does this mean to you?
If you are carrying on a business in Singapore, it is important that you are familiar with the GST registration rules and closely monitor your taxable turnover at the end of each quarter. This is to ensure that you are able to promptly register for GST when your turnover exceeds $1 million per year. IRAS conduct regular audits to identify businesses which fail to register for GST despite needing to do so.
Businesses failing to register for GST even though they are required to do so by law can be fined up to $10,000 and pay a penalty equal to 10% of the tax due from the date on which the business is required to register for GST. The business’ effective date of GST registration will be back-dated to the day that its liability to register arose. Consequently, the business will have to pay the outstanding GST on all its past transactions since the effective date of registration, even if this amount was not collected from its customers.
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