SINGAPORE – The taxman recovered a total of $175 million in goods and services tax (GST) and penalties between January and September this year, following audits and investigations of over 2,000 GST-related cases.
The Inland Revenue Authority of Singapore (Iras) on Sunday (Oct 13) said it had picked companies for audit by using data analytics to identify those at risk of non-compliance and evasion.
In a press release, the national tax collection agency said 53 cases involved GST fraud and evasion. Of this number, 20 cases have ended up in court.
“To date, 14 cases have been convicted, while six cases are still being heard in court,” said Iras.
In the 2018 financial year (FY), which runs from April to March, Iras recovered $195.8 million in taxes and penalties from its audit of 3,145 GST-related cases, based on publicly available figures.
It recovered $219.5 million from auditing 2,858 GST-related cases in FY 2017.
And in FY 2016, it recovered $168.8 million from its audit of 3,113 cases.
For cases stemming from investigations that did not arise from audits but may have been sparked by a tip-off, FY 2018 saw $37.5 million in taxes and penalties recovered from 155 cases, past reports showed.
It recovered $35.4 million from 243 cases in FY 2017, and $20.9 million from 120 cases the year before.
“Generally, non-compliance is more common among businesses with substantial cash transactions, weak internal controls or processes, and no or poor record keeping,” said the tax authority, adding that these practices are common among the self-employed and family-run businesses.
“Family members usually take on various business roles from sales to accounting. Some of these businesses which are handed from the founders to their successors tend to also pass down old, manual methods of accounting and record-keeping.”
Iras highlighted the example of the funeral industry, which comprises over 400 entities providing funeral-related services.
The premises of three funeral operators here were raided simultaneously by Iras investigation officers in September. The operation on Sept 17 covered over 10 locations across Singapore, with computers, mobile phones, SIM cards and business records seized.
The tax authority said a total of 16 people are currently assisting Iras in investigations for their suspected involvement in tax evasion and failure to register their businesses for GST.
Funeral operators are particularly susceptible to tax offences, as they are largely cash-based and may not have proper record-keeping practices, Iras said.
For example, a funeral operator will commence work after a client has decided on the choice of casket, and engage sub-contractors such as tentage suppliers and caterers.
On the final day of the wake, the client typically pays in cash using the contributions collected from family and friends. The undertaker, in turn, pays the sub-contractors with the cash received.
These transactions may not be recorded or maintained properly, the tax authority added.
“As sales and expenses may not be properly recorded, the business may not keep track of their annual taxable turnover and fail to register for GST on time,” said Iras. “The business may also file incorrect tax returns resulting in tax omission.”
Iras launched a web-based calculator on Oct 1, to let businesses more conveniently determine if they have to register for GST, by selecting its relevant sources of income and entering their income figures.
Those with taxable turnover exceeding the $1 million threshold are immediately directed to the myTax Portal, to submit their registration application.
The tax authority said it imposes lower penalties for those who promptly come forward with full disclosures of their mistakes uncovered in self-reviews.
Mr Lawrence Eng, Assistant Commissioner of Iras’ Investigation and Forensic Division, said: “Iras would like to invite businesses, especially family-owned ones, to do a self-review of their past records and voluntarily disclose any errors made.
“Iras will treat such disclosures as mitigating factors when considering the action to be taken.”