Sole-proprietor Convicted for Declaring an Incorrect GST Return

10 Jun 2016

Lim Yeo Beng (“Lim”), the sole proprietor of the electronics components business Golden Infra Enterprise, was ordered by the Court to pay a penalty of $49,605.18, which is double 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 $24,802.59 that he was not entitled to.

Lim pleaded guilty to one charge of making an incorrect return without reasonable excuse. Two other charges were also taken into account in the sentencing.

Overstated input tax knowingly to claim wrongful GST refunds

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 $28,489.56, which resulted in a GST refund of $24,802.59.

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

IRAS conducts audits to identify non-compliance with GST laws, including checks on whether businesses charge and collect GST correctly. This case was uncovered in one such audit.

Penalties for Making Incorrect GST Return

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.

Reporting of Malpractices

Businesses or individuals are encouraged to disclose any past tax mistake. 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

Cash Rewards for Informant

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

Inland Revenue Authority of Singapore