Category Archives: Singapore GST

Singapore GST – Businessman Guilty of GST Fraud, Sentenced to 24 Weeks’ Imprisonment


It was reported in the IRAS’  website on 20 October 2017 that
Foo Tee Suan (“Foo”), who was the sole-proprietor of FTH Enterprise (“FTH”), partner of F&T Top System Enterprise (“F&T”) and Hwa Rong Import & Export (“HRIE”) and director of Hwa Rong Enterprise Pte Ltd (“HREPL”), has been convicted of making false entries in the GST returns of the four business entities which resulted in GST refunds totalling $458,019.69.

One of Foo’s business entities, F&T, was audited by IRAS during one of its regular audits of GST-registered businesses. During the course of the audit, IRAS’ auditors discovered that Foo had made false entries in the GST returns of F&T. The audit further discovered that Foo had also made false entries in the GST returns of three other business entities that he was involved in.

Foo’s scheme to commit GST tax fraud first began with a suggestion from Eric Chia Puay Yeoh (“Chia”), who was convicted in July 2014 of masterminding a complex GST scam using multiple shell entities. Chia suggested to Foo to voluntarily register his export business, FTH Enterprise (FTH), for GST so that FTH could claim fictitious GST refunds. Thereafter, Foo set up three other entities that were all shell companies without any business transactions.

Foo, with willful intent to evade tax, signed blank GST return forms for the four business entities and provided Chia with his SingPass in order for Chia to e-file the GST return forms for the four business entities. To illegally obtain GST refunds, Chia declared fictitious figures in the GST returns and fraudulently claimed a total of $457,749.59 in GST refunds. Foo benefitted from the fictitious GST refunds that Chia obtained and used some of the GST refund monies for his own personal expenses.

Foo faced a total of 54 GST charges of wilful intent to evade tax by making false entries in the GST returns of the four business entities. He pleaded guilty to 18 out of the 54 GST evasion charges, involving a total GST amount of $172,314.90 undercharged, with the other 36 remaining GST evasion charges being taken into consideration for the purposes of sentencing. The Court sentenced Foo to 24 weeks’ imprisonment and ordered him to pay a penalty of $516,944.70, three times the amount of tax undercharged.

What does this mean to you?

GST-registered businesses are allowed to offset the GST they pay for their purchases (input tax) against the GST they collect from sales (output tax). They pay the net difference to IRAS. Those that incur more GST on purchases than they collect from their sales can claim the difference from IRAS in the form of GST refunds.

It is a serious offense to claim GST input tax on fictitious purchases or understate output tax on sales. Offenders face a penalty of three times the amount of tax undercharged, a fine not exceeding $10,000, and/or imprisonment of up to seven years.

If you have any questions, please contact support@whm-consulting.com

 

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Singapore GST – GST Guide on Insurance: Cash Payments and Input Tax on Motor Car Expenses


On 3 April 2017, the IRAS reissued the Second Edition of its e-Tax Guide on GST Guide on Insurance: Cash Payments and Input Tax on Motor Car Expenses.

One of the changes relates to the clarification of the GST treatment for input tax on medical expenses incurred by insurance companies.

If the claimant incurs the expenses (e.g. medical expenses incurred during a hospital stay) and the hospital forwards the claim directly to the insurance company, the question is whether this would be treated as a supply made by the hospital to the insurance company.

A distinction should be made between motor car policies and medical/health policies.  Unlike motor car insurance policy where the insurance company may have to contract for services from an authorised motor workshop to reinstate the motor car to its original condition as required under the insurance contract, the insurance company does not have any obligation to contract for or provide any medical services to the insured under medical/health policies. Hence, any payment made by the insurance company to the hospital should be regarded as a payment arrangement and not as consideration for a supply of services to the insurance company. The insurance company should not claim input tax based on tax invoices received from the hospital. Instead, the insurance company should claim deemed input tax on the Cash Payment provided certain qualifying conditions as stipulated on the e-Tax Guide are satisfied.

If you have any questions, please contact support@whm-consulting.com.

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Singapore GST – Sole-proprietor Convicted for Declaring an Incorrect GST Return


It was published in IRAS’ website on 10 June 2016 that
Lim Yeo Beng (“Lim”), a sole proprietor of the electronics components business Golden Infra Enterprise, was ordered by the Court to pay a penalty of $49,000, which is 2X the amount of tax undercharged, and fine of $1,500. Lim declared an incorrect return by overstating his input tax claims, leading to a GST refund of $24,800 that he was not entitled to.

IRAS’ investigations revealed that the declaration of Lim’s GST return for the accounting period from 1 January to 31 Mar 2008 was incorrect.  Lim, who was the sole-proprietor, did not ensure the accuracy of his GST declarations by checking the supporting documents that were prepared by his employee.  As a GST-registered sole proprietor, Lim had the responsibility of ensuring accurate GST returns. The input tax claims was overstated for the amount of $28,400, which resulted in a GST refund of $24,800.

What does this mean to you?

It is a serious offence to submit incorrect GST returns by overstating any input tax. Offenders face a penalty that is double the amount of tax undercharged, and a fine not exceeding $5,000 or imprisonment of up to 3 years or both.

If you have any questions, please contact support@whm-consulting.com.

Singapore GST – Price Display Requirement Clarified


If you are registered GST and you have been quoting your price like this:  $1,000 + GST, then you must read the following ASAP because you have already breached the price display requirement under our GST Act …

If you are registered for GST, you should be aware that under GST Act, you are required to show GST-inclusive prices on all price displays (e.g. price tags, price lists, advertisements, publicity brochures and website). Prices that are quoted, whether written or verbal, must also be GST-inclusive.

At the same time, starting from 1 Apr 2015, GST-registered businesses must display or quote both the GST-inclusive and GST-exclusive prices to show the GST-inclusive price at least as prominently as the GST-exclusive price.

Source: IRAS Website 

You should also know that quoting the following clauses but not the GST-inclusive prices is not acceptable :

  1. “Prices stated are subject to GST”;
  2. “Prices stated are exclusive of GST”; and
  3. “Prices stated are before GST”.

Failure to comply with any of the price display requirements is an offence that can result in a fine of up to $5,000.

If you have any questions, please contact us at support@whm-consulting.com.

GST – Clarification of Unauthorised Collection of GST


Ever wonder whether you can collect GST before your application is approved because you’d been told that IRAS would backdate your GST registration to the date when you first charged GST on your sales.

Under Singapore GST Act, only GST-registered businesses are allowed to charge GST on their sales.   The IRAS has recently clarified that they are aware that some businesses have been wrongly advised on this point, thinking that they can collect GST before their application for GST is approved because IRAS would backdate their GST registration to the date when GST was first charged on their sales.  This is incorrect. 

The IRAS do backdate the registration of businesses that are compulsorily required to register.  However, this backdating of GST registration does not in itself ratify the wrongful act of collecting GST before a business is registered for GST.  The business would still have committed an offence for the GST collected for the backdated period prior to IRAS’ backdating of its registration.

You should be aware that under the GST Act, it is a serious offence for businesses that are not GST-registered to charge and collect GST from their customers.  Offenders face a penalty of 3 times the tax wrongfully collected and a fine of up to $10,000..

If you have any questions, please contact us at support@whm-consulting.com.