29 Jul 2011

Suharry Bin Abdullah (“Suharry”), the director of a beverage company, Republic Beverages Company Private Limited (“RBC”) was sentenced to 4 months’ jail and ordered to pay a penalty of $140,023.59 for creating false GST entries and fictitious invoices to defraud the Comptroller of GST. RBC was fined $40,000 and ordered to pay the same amount of penalty.

RBC which started in 2006, is a company that engages in supply and distribution of beverages. False entries in RBC’s GST returns was made by Suharry from March 2008 to August 2008, resulting in net GST refund claims which he was not entitled to. The total amount of false GST claims was $32,158.98.

In addition, Suharry had also created 6 fictitious purchase invoices when IRAS requested for supporting documents. IRAS also uncovered that Suharry had forged the 6 suppliers’ invoices in his attempt to mislead IRAS into thinking his GST refund claims were genuine. The total amount of GST involved for the forged invoices is $20,394.64.

Suharry and RBC faced 8 charges each. Suharry pleaded guilty to 10 of the charges. The remaining 6 charges were taken into consideration for sentencing. Suharry was sentenced to 4 months imprisonment and ordered to pay a penalty of $140,023.59, which is 3 times the amount of tax undercharged.

GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim a refund of the difference from IRAS.

Claiming input tax on fictitious purchases is an offence. Offenders face a penalty of up to 3 times of the amount of tax undercharged and/or imprisonment up to 7 years.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit www.iras.gov.sg for more information.

14 July 2011

It was revealed by IRAS that two male Indian nationals – Pakkiri Mohamed Abdul Karim, 43, and Perumal Sugumaran, 42 – and a Singaporean man, 74, were arrested for cheating on the Tourist Refund Scheme by conspiring to retain 11 pieces of “Goods and Services Tax (GST) refunded” jewellery in Singapore.

On 6 June 2011, Pakkiri, who was scheduled to depart for India later that day, approached Customs Officers at the GST Refund counter at the transit area of Singapore Changi Airport Terminal 2, holding a pouch containing 11 pieces of jewellery and their purchase receipts. After collecting the GST refund for the jewellery, Pakkiri proceeded to the transit area and handed over the pouch to a Singaporean man, who was later found to be holder of an airport access pass. Pakkiri then left for the boarding area, after tearing and disposing the receipts.

The Singaporean man placed the pouch inside his pocket and left the transit area. He then proceeded to the Departure Hall, where he was joined by Perumal. Sensing that something was amiss, Immigration & Checkpoints Authority officers moved in to check on them, and found the pouch of jewellery on Perumal. He was arrested immediately. The Singaporean man and Pakkiri were also apprehended.

Investigations by Singapore Customs revealed that Pakkiri had planned to leave the jewellery with Perumal, and to collect it back on the following Friday upon his planned return to Singapore. Aware that he was not allowed to bring goods into Singapore after the GST claims for such goods had been made, he sought help from the Singaporean man to hand over the jewellery to Perumal.

Pakkiri and Perumal were each sentenced to a Court fine of $3,000 or, in default, three weeks’ imprisonment. Investigations are still ongoing for the Singaporean offender. The jewellery involved was worth more than $18,000, with GST exceeding $1,000.

Information on the scheme can be found in the e-Tax guides, ‘Guide to Visitors on Tourist Refund Scheme’ and ‘Guide to Retailers operating Tourist Refund Scheme’, on the Inland Revenue Authority of Singapore website, or the Singapore Customs website under ’Information for Travellers’.

Source: IRAS