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Goods and Services Tax (GST) is a consumption tax imposed on imported goods and almost all supplies of goods and services in Singapore. A business must register for GST when the taxable turnover exceeds S$1 million, with certain exceptions. Singapore’s GST rate has remained at 7% since 1 July 2007. It will be progressively increased from 7% to 8% on 1 January 2023 and to 9% on 1 January 2024. Introducing the GST rate hike progressively over 2 years helps to manage concerns over the rising costs of living and inflation.
With the increase in GST rate, the Government recognises that businesses may, at the same time, adjust prices to reflect the increase in operating costs such as wages, utilities, rental and materials in their supplies. While the Government does not regulate the pricing decisions of individual businesses, it does expect businesses to be transparent in their pricing to consumers and not use the GST increase as a cover for any increase in prices beyond the GST rate change. The Government has been working with industry stakeholders to raise awareness on price transparency and facilitate price comparisons.
The Inland Revenue Authority of Singapore (IRAS) conducts regular audits to ensure that the correct GST rate is applied and that GST-registered businesses display GST-inclusive prices. IRAS also runs regular audit programmes across various industries to ensure tax compliance by individuals and businesses. However, there are still business and individuals who have been found guilty of non-compliance and tax evasion for GST.
Below is a summary of 3 GST cases reported in 2022.
1. Couple Convicted for Multiple Tax Evasions
Mr Lim Meng Fatt and Ms Gan Bee Bee have been convicted by the Court for Income Tax and GST evasion. For their GST offence, they have fraudulently de-registered their company from GST even though the company was still liable to be GST-registered. The total GST evaded amounted to S$163,206. They have also omitted output tax amounting to S$84,304 in the company’s GST return. For these two offences, the Court sentenced Mr Lim to 16 months’ imprisonment and Ms Gan to 17 months’ imprisonment and penalties totalling S$1,485,068.
2. Sole-Proprietor Convicted for Evading GST and Income Tax and Failing to Keep Proper Records
Mr Khoo Chin Huat, a sole-proprietor, was found guilty of poor record keeping and arbitrarily adjusting his GST payable figures downwards from 2012 to 2016. The adjusted sales and purchase reported in his GST Returns were used to report for income tax for the relevant Years of Assessment. Despite a self-review request initiated by IRAS in 2017, Mr Khoo continued to submit incorrect information to IRAS. He also failed to keep and retain tax invoices received by him for his business from its suppliers and vendors as required under the GST Act and the Income Tax Act.
Mr Khoo has been sentenced by the Court to 54 weeks’ imprisonment and ordered to pay fines and penalties amounting to S$1,784,451 after being convicted for the wilful intent for GST evasion, Income Tax evasion and failure to keep proper business record.
3. Night Club Operator Convicted for GST Evasion and Money Laundering
Mr Soon Kok Khoon, a night-club operator, was found guilty of GST evasion involving S$210,287 of tax undercharged. He made false entries in his clubs’ GST returns, omitted sales revenue of his clubs which resulted in GST undercharged and diverted the sales revenue from the sales of flower garlands from his clubs (which were GST-registered) to two other shell companies (which were not GST-registered and had no actual business activities) using separate point-of-sale terminals linked to them. The undeclared revenue from the sales of the flower garlands from the clubs was recorded as proceeds from fictitious sales of souvenirs in the accounts of the shell companies. He then understated the fictitious sales of souvenirs in the accounting books in these shell companies to avoid hitting the GST registration threshold for each company.
For the above offences, Mr Khoo was sentenced to 34 weeks' imprisonment and ordered to pay a penalty amounting to S$630,861, which is three times the GST amount he evaded.
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