Chong Wee Keng, a renovation contractor who owned a sole-proprietorship, D'Esprit Design & Renovations, has to pay a total of $504,500.80 in back-dated taxes and penalty for failing to register for Goods and Services Tax (GST). In addition, he has to pay a fine of $4,500.

IRAS' audit programme uncovered the offence

IRAS runs regular audit programmes across various industries to check the level of tax compliance of the businesses. Using data analytics tools, IRAS is able to cross-check data and detect anomalies. This case was uncovered through one such audit programme.

IRAS' investigations revealed that Chong Wee Keng was liable to notify the Comptroller of GST of his liability to register for GST by 30 October 2006. However, he failed to do so by the due date; hence, he has failed to account for GST on the sales transactions carried out by the business.

Chong Wee Keng must now pay $458,637.09 of GST that he did not account for between 1 December 2006 and 31 December 2010. In addition, he has to pay a penalty of $45,863.71 which is equal to 10% of the amount of the tax due. He was also fined $4,500 by the Court.

Businesses with over $1 million turnover must register for GST

It is compulsory for businesses with an annual turnover of more than $1 million to register for GST. Businesses should regularly assess if they need to register for GST. If the turnover for the past four quarters or expected turnover for the next 12 months exceeds $1 million, businesses are legally required to notify the Comptroller of GST of their liability to be registered for GST within 30 days of the end of the fourth quarter.

GST-registered businesses can charge GST on their sales and offset this with the GST they pay on their purchases before accounting for the net difference to IRAS.

Penalties for Failure to Register for GST

IRAS reminds businesses to comply with 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 $1 million per year. We regularly conduct 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.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past tax mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken. Those who wish to disclose past mistakes, reveal evaded taxes, or report malpractices that might indicate tax evasion, can write to:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987

Email: [email protected]

Cash Rewards for Informant

A reward based on 15% of the tax recovered, capped at $100,000, would be given to informants if the information and/or documents provided lead to a recovery of tax that would have otherwise been lost. All payments are at the discretion of the Comptroller. IRAS would ensure that the identities of informants are kept strictly confidential.