Company to pay S$793,000 in taxes, penalties and fines for failing to register for GST

31 March 2014

On 28 March 2014, the Inland Revenue Authority of Singapore (“IRAS”) reported that a sports and concerts event promoter, Midas Promotions Pte Ltd (“Midas”), was ordered to pay about S$786,000 in taxes and penalty for failing to inform the Comptroller of Goods and Services Tax (“GST”) of its liability to register for GST.   In addition, it also had to pay a court fine of S$7,000.

Under the law, a business with annual taxable turnover exceeding S$1 million must register for GST. Businesses are required to regularly assess whether they are required to be registered for GST. In most cases, a business must register for GST when the business’ taxable turnover for the past four quarters exceeds S$1 million, or when the business’ taxable turnover for the next 12 months is expected to exceed S$1 million. Businesses need to register for GST within 30 days of the date on which their liability to register for GST arises.

IRAS’ investigations revealed that Midas’ taxable turnover already exceeded S$1 million for the four consecutive quarters ending 30 June 2004 to 31 March 2005. However, Midas did not inform the Comptroller of GST of its liability to register for GST within 30 days of the end of 31 March 2005, that is, by 30 April 2005.

Consequently, Midas failed to account for a total GST of S$714,696.87 between 1 June 2005 and 30 April 2012. As a result, other than paying the GST, Midas has to pay a penalty equal to 10% of the amount of the tax due which amounted to S$71,469.69.

Businesses are reminded to follow GST registration rules by closely monitoring their taxable turnover at the end of each quarter and ensuring that they promptly register for GST when their turnover exceeds S$1 million per year. Regular audit programmes are carried out by IRAS to identify cases liable for compulsory GST registration.

Businesses that fail to register for GST when they are required to do so by law can be fined up to S$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. In addition, 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 the amount was not collected from its customers.

Businesses or individuals are encouraged to disclose any past tax mistakes to the IRAS immediately. IRAS will treat such disclosures as mitigating factors when considering action to be taken.

In addition, IRAS will offer a reward of up to 15% of the tax recovered, capped at s$100,000 to informants if the information and/or documents provided lead to a recovery of tax that would have otherwise been lost. The identities of informants will be kept strictly secret and confidential.

Source: Inland Revenue Authority of Singapore