GST cheats tried to claim $334k in tourist refunds

Those prosecuted for abusing a goods and services tax (GST) refund scheme meant for tourists visiting Singapore have tried to make away with a total of $334,000 in the past five years.

The amount was racked up by just 10 offenders, a spokesman for the Inland Revenue Authority of Singapore (Iras) told The Straits Times.

They tried to claim GST refunds mostly on jewellery purchased.

The Tourist Refund Scheme allows eligible tourists to claim a GST refund for goods bought in and taken out of Singapore. Those who have spent 365 days or less in Singapore in the last two years before the date of purchase and have not been employed here in the six months before the purchase qualify as tourists.

Singapore citizens, permanent residents (PR) and foreigners working here are not allowed to claim GST refunds under the scheme.

However, people here have had tourists claim the money for them.

In the most recently highlighted case, a Singapore PR Zheng Da Fei had approached a Chinese tourist at Changi Airport to help him claim a GST refund under the Electronic Tourist Refund Scheme (eTRS) for a $44,500 Cartier watch his wife bought in May 2014.

The GST refund was $2,911.21. Zheng was caught by Singapore Customs officers, who detected the fraudulent tourist refund claim at the airport. He was found guilty of tax refund fraud under the GST Act.

Last month, he was sentenced to a fine of $4,500 or, in default, three weeks' imprisonment.

In other cases, people made false declarations to claim GST refunds on goods not bought by them or presented false receipts and eTRS tickets to claim GST refunds on purchases not belonging to them. The 10 people prosecuted include Singapore citizens and PRs, as well as Indian tourists and Filipino nationals.

The abuse of the refund scheme has come under the spotlight after a proposed change to give the Comptroller of GST the power to impose travel restriction orders on those who fail to repay such wrongful claims. Under the proposed change raised in Parliament on Jan 25, people who do not repay wrongfully claimed refunds of GST meant for tourists will be barred from leaving Singapore.

The order will be lifted when the refunds owed have been repaid.

Iras will make every effort to recover the money from the offender, including appointing the offender's bank or employer to do so, said its spokesman.

Iras works closely with the Singapore Customs to uncover any attempt to abuse the Tourist Refund Scheme, she added.

"We conduct surveillance and carry out investigations. We also have systems and safeguards in place to spot anomalies in GST refund claims," she said.

Under the GST Act, a person who engages another person to seek or obtain approval for a refund under the Tourist Refund Scheme faces a fine up to $5,000 or, in default of payment, jail of up to six months.

Those who fraudulently claim GST refunds may face a penalty of three times the amount of tax refunded. They can also be fined up to $10,000, jailed up to seven years, or both. Their goods may also be seized.

Criminal lawyer Amolat Singh said the proposed change to the law may deter potential offenders. "They will think twice about committing the offence. This is hurting them where it matters most, as their movements will be restricted," he said.

This article was first published on Feb 13, 2016.
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