A supplier offers your business a fast deal with attractive margins. However, before entering into the transaction, businesses should consider whether the arrangement is genuine and whether there will be an actual supply of goods or services.
For GST-registered businesses, the GST paid on business purchases is called input tax. While a tax invoice is required to support an input tax claim, it is not enough on its own. Businesses must also be able to show that the claim relates to an actual supply and a genuine business transaction. If the underlying transaction is not genuine, the input tax claim will be denied.
A recent GST Board of Review decision is a useful reminder. In April 2026, the Board upheld the Comptroller’s decision to deny about $2.4 million in input tax claims. The case is a reminder that businesses should not rely on paperwork alone. They should understand who they are dealing with, carry out appropriate due diligence, and take active steps where risks are identified.
Checks to Help Protect Your Business and Input Tax Claims | |
| 1 | Be wary if a deal seems too good to be true. If a deal is unusually profitable, outside of your normal business, or arranged too quickly, do further checks to ensure it is genuine. |
| 2 | Know your suppliers and customers. Carry out appropriate due diligence checks before entering into new or high-value business arrangements. |
| 3 | Take active steps when risks are identified. Follow up on red flags, conduct further checks where needed, and consider not proceeding with the transaction if concerns remain unresolved. |
A Recent Case: GIY v The Comptroller of Goods and Services Tax [2026]
In this case, the taxpayer claimed about $2.4 million in input tax on vacuum pads and audio transformers from local suppliers, which were subsequently exported to customers in Hong Kong. Following an audit, the Comptroller denied the input tax claims as he was not satisfied that there had been a supply of the goods and that the transactions were genuine. On 30 April 2026, the GST Board of Review dismissed the taxpayer’s appeal and upheld the denial of the input tax claims.
Why the Claims Were Questioned
The taxpayer provided invoices and documents showing the delivery of the goods to it and their subsequent export to Hong Kong. However, when the Comptroller examined how the transactions took place, how they were arranged and paid for, and the parties involved, several unusual features raised serious doubts about whether the transactions were genuine. The Comptroller therefore denied the input tax claims as he was not satisfied that there had been a supply of the goods and that the transactions were genuine.
The Board agreed that the evidence provided by the taxpayer was insufficient to address the concerns raised by these unusual features. It dismissed the taxpayer’s appeal and upheld the denial of the input tax claims.
Unusual Features Businesses Should Note
The Board considered several factors which, taken together, made it difficult to accept the transactions as genuine:
| i. | Sudden high-value trading outside the taxpayer’s usual business: The taxpayer moved into large trades involving vacuum pads and audio transformers, even though these were not part of its normal business activities. |
| ii. | Unclear source of goods: There was insufficient evidence to show clearly where the goods came from. No credible manufacturer, importer or other source of the goods could be identified. |
| iii. | Deals appeared to be arranged by the same person: The suppliers and customers appeared to have been introduced or coordinated by one person. |
| iv. | Unusual payment and delivery arrangements: Customers paid before receiving the goods, while suppliers delivered before being paid. This made the commercial reason for the transactions less convincing. |
| v. | Limited safeguards for high-value trades: There were no written agreements with the overseas customers, even though the transactions involved large sums. |
| vi. | Doubts over the overseas customers: There were also questions about whether the Hong Kong customers were genuine trading businesses. This added to the overall concern that the chain of transactions may not have reflected real commercial dealings. |
For more details, businesses may read the Board’s judgment on Singapore Law Watch.