Goods and Services Tax Fraud: Penalties, and How to Avoid It

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Goods and Services Tax Fraud: Penalties, and How to Avoid It

SCS Admin

calendar Feb 05, 2021

Goods and Services Tax Fraud: Penalties, and How to Avoid It

The Inland Revenue Authority of Singapore (IRAS) is strict when it comes to penalizing businesses and their proprietors on tax malpractices such as tax evasion and tax fraud. Those who are found guilty of these cases were ordered to pay a fine, a penalty up to thrice the undercharged tax, and even imprisonment.

Offenders who intentionally commit these crimes are knowledgeable about the in and outs of these processes. However, even those with a clean conscience but unaware of tax processes, can still be penalized due to negligence of your responsibilities as a business entity.

The basic types of taxes any professional and business owner should understand and adhere to are Corporate Tax, Personal Tax (for Sole Proprietorship), Personal Tax (Multiple Sources Income), and especially Goods and Services Tax (GST).

Importance of GST

GST in Singapore is also known as Value Added Tax (VAT) in other countries. This is the indirect tax that is added in the purchased goods or service. Among other benefits of this tax, GST aids the government in lowering personal and corporate income taxes to increase foreign direct investment, thus increasing the country’s economic growth.

GST registered companies in Singapore also have a leverage in the consumer market – as it enhances a small and medium business’s credibility since they can be associated with most high performing companies that are GST registered. GST registration can be compulsory or voluntary, depending if you have met IRAS qualifications. Filing for GST is also done online by submitting the documents required.

Cases of GST violations

Proprietors who are found to be in non-compliance of GST are sent to court and sentenced due punishment. In the year of 2020 and 2021, there have been 7 IRAS cases with GST violations resulting in penalization. Some of the cases are the following:

Failure to Register for GST

A case of an owner whose business is under the qualifications of compulsory GST registration failed to filed his/her business paid a penalty of $24,649 and a fine of $4,000.

Late Registration

For compulsory GST registration, businesses should register on time. In this case, the late registration resulted in a fine of $4,000 and a penalty of $11,807.

False Entries in GST returns

Falsifying anything is inherently unjust. False GST return filing resulted in the cases of a jail term of 14 weeks and 1 month, and a penalty of $66,660, and 14 weeks of imprisonment, and a penalty of $323,733.

Unlawful collection of GST of a non-GST registered business

Obviously, a business does not have the right to collect GST if it is not registered. This case resulted of having charges against the Unlawful GST Collection, and Failure to Register for GST with Penalties of $10,197 and $9,940, respectively; and Fines of $73,200 and $4,000, respectively.

How to avoid GST violations

A single case will tarnish you and your business’s credibility. To avoid Tax Fraud and save yourself the trouble with the meticulous registration and filing, acquire services from a trusted Certified Public Accountant (CPA) Firm with decades of experience. Singapore Corporate Services (SCS) will assist you in keeping your GST transactions in check.

SCS provides professional assistance in GST Registration Online, Quarterly GST Return, Timely Reminders, and Complimentary General GST inquiries for only $300 quarterly.

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