Tang Ee Boon (“Tang”), 32, the managing director of V-Teb Services Pte Ltd (“V-Teb”) was convicted of GST fraud amounting to $327,837.49 and was sentenced to 12 months’ jail. Tang was brought to court for 21 charges of making inflated and false claims of GST refunds for the period 1 Jan 2004 to 30 Jun 2007.
GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim the difference as GST refund from IRAS.
What went wrong for Tang’s ploy?
V-Teb provides cleaning services locally. By nature of his business, the company is not expected to claim GST refunds.
However, IRAS’ tax auditors noted a pattern of submitting increasing amounts of GST refund claims in the GST returns on a frequent basis. IRAS actually verifies the value of V-Teb’s taxable purchases with the alleged suppliers.
What did Tang get for his mischiefs?
Tang pleaded guilty to a total of 14 charges of evading GST,
- comprising three charges of understating output tax,
- eight charges of overstating input tax, and;
- three charges of making false entries in V-Teb’s GST returns.
In addition to the jail term, the court also ordered Tang to pay a penalty of $983,512.47, which is three times the amount of GST undercharged.
Source – http://www.iras.gov.sg – Edgar basically paraphrase/paragrapg the original article.
What are the key performance indices for IRAS? I will present its KPIs using the analogy of a company’s financial statement.
- The topline has grown by 11%. Total tax revenue collected for FY05-06 is $19.9bio. This is about $2bio more than FY04-05. This upward trend has been apparent over the last 5 years.
- Its cost of sales ie. the cost to collect a $1 tax revenue, is 1 cent.
- IRAS’s revenue is now about 70% of the Group’s (ie. Government’s) total operating revenue of $28bio. This is higher than last two financial years’ average of 65%.
- Sectoral performance review of its topline. IRAS received $7.3bio (37%) from corporate tax, $4.3bio (22%) from income tax, $3.8bio (20%) from GST and last $1.8bio (9%) from property tax.
- Other operating income ie. IRAS’s collection of fines and penalties. The amount of penalties collected from GST violations amounted to $76.2mio (a drastic decline of 35%). The amoun of penalties collected from income tax violations amount to $61.4mio (an even bigger decline of 46%).
- IRAS’s online business is not going as plan. What online business? IRAS wishes to encourage more e-filings. The no. of e-filers among individuals declined to 785,000 from 885,000 in FY04-05 despite an increase in total no. of taxpayers from 1.3 people to 1.5 people.
- IRAS’s bottomline ie. operating surplus of $40mio is a significant 93% improvement over the previous year.
Recommendation – This company is a strong buy with significant growth expected in most sectors that it is in. All KPI measures indicate the company is more than ready for that growth with a small black mark noted on its “online business”.