The city state of Singapore is looking at routes to reduce Goods and Services Tax (GST) fraud. In particular, missing trader fraud which involves sellers dishonestly reporting sales as GST-exempt exports when they actually sell the goods locally and pocket the GST charged.
The measures being considered in a public consultation will include:
- Businesses which attempt to reclaim GST where their supplier has perpetrated a ‘missing trader fraud’, and the business should knew or should have known that the purchase was part of such a fraud, may be denied the deduction by the Singaporean Comptroller of Taxes. The burden of proving that the business knew or should have known of the fraudulent arrangement lies on the Comptroller, with the standard of proof being the balance of probabilities. This measure is similar to the approach taken in the United Kingdom and the European Union to safeguard tax revenue;
- A 10% penalty on any denied missing trader fraud GST deductions
- Free the Comptroller from the obligation to refund VAT within 90 days of a claim if the Comptroller suspects missing trader fraud
- Permit the Comptroller to deregister any businesses who acted fraudulently or who knowingly facilitated a fraud
- There are a range of other amendments to clarify e-payments, reclaims of overpaid GST and GST anti-avoidance rules.