SINGAPORE: In a notable case highlighting tax evasion, two men were charged in court on 5 August 2024 over their alleged involvement in a Goods and Services Tax (GST) missing trader fraud scheme valued at approximately S$181 million (US$140 million).
What is Missing Trader Fraud?
Missing trader fraud is a complex scheme where sellers collect GST but fail to remit it to the Inland Revenue Authority of Singapore (IRAS). The sellers, referred to as missing traders, create a deceptive chain of sales that allows businesses downstream to claim refunds from the IRAS for GST they have ostensibly paid.
The Allegations
- The accused, Derrick Yeo Wei Kin (40) and Yeo Kian Huat (73), allegedly established four shell companies to facilitate this fraudulent enterprise between November 2017 and April 2018.
- They purportedly sold goods at inflated prices amongst these companies, with transactions totalling around S$181 million.
- Both men face four charges of fraudulent trading under the Companies Act.
Specific Charges Against Derrick Yeo
Derrick Yeo is accused of submitting three fraudulent GST refund claims to IRAS, attempting to cheat the authority into disbursing S$11.8 million. Moreover, he allegedly forged a supplier’s invoice to secure GST registration for one of the shell companies.
Yeo is also said to have made false claims under the electronic tourist refund scheme, leading to unlawful GST cash refunds exceeding S$140,000.
Legal Proceedings and Possible Penalties
If convicted of fraudulent trading, both men may face a jail term of up to seven years, hefty fines, or both. Derrick Yeo could additionally face a 10-year sentence for forgery.
The authorities, comprising the Singapore Police Force and IRAS, emphasise their stringent stance against tax-related offences, advocating that businesses exercise due diligence to avoid engaging in fraudulent arrangements.
The cases were adjourned for pre-trial conferences, with both men maintaining their innocence, although the older Yeo intends to claim trial.