Today's post is inspired by the article "IRAS goes after GST cheats" which appeared in athe Malaysian local papers.
In Singapore, the GST is the No. 2 revenue-earner for the government after corporate income tax. And they now stepping up the effort to find the GST cheats.
What are the areas where a GST registered business can cheat the government out of the GST dues? Take note that if you commit these acts, you will be sentenced to jail.
Some of these offenses are committed out of ignorance, and some are committed out of negligence. There are some who deliberately submit fake or inflated claims. We hope you will take note of these offense and take steps not to repeat the offenses
1. Fraudulent claim for tax refund
GST-registered businesses can offset the GST they pay for their
purchases, known as input tax, against the GST they collect from the
sales of their products, or output tax.
If a business incurs more GST on purchases than it collects from sales, it can claim the difference as a refund from Iras.
Some cheat by claiming that they spent much more on their purchases than they actually did, in order to get a refund. They are not able to produce proof of claims.
2. Fictitious business
One business volunteered to be registered for GST even though the whole turnover is below the threshold. His company is a shell company. He submitted fictitious invoices when there were no business transactions at all.
3. Collecting GST even though he is not registered for GST
Many non-registered companies collect GST from their customers eve though there are not registered.
Consumers should make a point to check the Iras website to see if a business is GST-registered, so it is
not easy to fool people into paying GST if a business is not authorised
to collect it.
4. Failure to register for GST after reaching the threshold
A business is required to register as a GST-registered business after reaching the threshold. Failure to do so is an offense too.
It is easy to flout the GST laws because most businesses are not familiar with GST rules.
