- More than 300 GST-registered businesses audited or investigated were found to be involved in Missing Trader Fraud
- About $450 million of GST claims denied and under audit or investigation
Businesses found complicit in the GST Missing Trader Fraud scheme will be barred from claiming their GST incurred on purchases or zero-rate their sales, and may be fined or receive a jail term, on top of being penalised for up to 300% of the tax amount.
What is GST Missing Trader Fraud Scheme?
You may be drawn into Missing Trader Fraud Schemes when you transact with businesses that are:
– involved with criminal syndicates
– offering guaranteed profit margins involving ready suppliers and customers
– out to deceive IRAS into paying out GST refunds on improper refund claims
– requesting you to register for GST or set up a GST-registered business in order to make fictitious GST refund claims.
Watch out for these typical tell-tale signs of a fradulent arrangement:
1. No Commercial Risks: Guaranteed orders; purchase to sale is back-to-back.
2. Guaranteed Profits: Consistent or pre-determined profit margins regardless of quantities or specifications of goods traded
3. No Credit Risks: Payment is received from customer before payment has to be made to supplier
4. Minimal Business Costs and Efforts: Low start-up and infrastructure costs required; no or minimal efforts to source for suppliers or customers.
5. Easy to Transport High-value Goods: Goods most often susceptible to GST fraud are low weight, easy and cheap to transport in high quantities and high in value.
How do you protect your business?
1. Ensure the legitimacy of the parties involved: Know your customers’ and suppliers’ history in the business
2. Examine payment arrangements: Avoid arrangements that have higher risks of being linked to money laundering activities, e.g. cash-only transactions, payment deposited is immediately transferred out or withdrawn.
3. Verify the goods and ensure commercial viability of the transaction: Know the brand, manufacturer and country of origin, and assess if the volume and value of goods traded are reasonable.
Let’s fight fraud together
Click HERE to download more details.
For more information, please visit the IRAS GST-registered Businesses website. You can also email IRAS at [email protected] if you suspect or encounter any fraudulent dealings.