Man in GST missing trader fraud involving S$55 million in fictitious sales sentenced to jail

SINGAPORE: A man who was accused of Goods and Services Tax (GST) missing trader fraud involving about S$55 million (US$42.6 million) in fictitious sales was sentenced to four years and two months’ jail on Monday (Sep 23).
Tan Nuan Seng Francis is the last of three men in the case to be sentenced, the Singapore Police Force (SPF) and Inland Revenue Authority of Singapore (IRAS) said in a joint news release.
Tan was found guilty of one count of fraudulent trading, one count of forgery and one count of criminal breach of trust in relation to a separate case.
Two other charges, one of forgery and the other of transferring benefits from criminal conduct, were taken into consideration for the purposes of his sentencing, SPF and IRAS said.
Tan’s accomplice in the fraud, Yeo Soon Teck Kelvin was convicted and sentenced to five years’ imprisonment on Feb 29 for fraudulent trading and forgery.
Another man involved in the case, Sia Hock Chuan, was convicted on Oct 5, 2023 for failing to exercise reasonable diligence in the discharge of his duties as a director of a company involved in the GST missing trader fraud.
Sia was sentenced to the maximum fine of S$5,000 and disqualified from acting as a director of or managing any company for three years.
Perpetrators of the GST missing trader fraud seek to abuse the GST system to generate illegal proceeds through a string of false transactions, the police and IRAS said, adding that these false transactions are the basis of fraudulent GST refund claims made to IRAS.
Missing trader fraud happens when a seller collects GST from sales but does not pay the tax to IRAS. The seller is known as the missing trader. 
Meanwhile, businesses further down the supply chain continue to claim refunds from IRAS for the GST paid on their purchases. 
Tan and Yeo had admitted to using M_Solution Trading – a shell company with no real business – to perpetrate the fraud. Yeo also operated another company, Crescendo Hardware Trading as part of the same fraud. Sia was the nominee director of M_Solution Trading.
Between September 2015 and December 2015, Tan and Yeo forged 90 sales invoices issued by M_Solution Trading for the purported sales of goods amounting to approximately US$55 million.
These goods appeared to have been sold through chains of other business entities including Crescendo Hardware Trading and eventually to exporters, who made claims for GST refunds from IRAS.
“These sales were a sham and there were no genuine sales or deliveries,” SPF and IRAS said.
GST was also charged on these sales even though M_Solution Trading had only been GST-registered from Dec 1, 2015.
“These fictitious sales invoices were generated to support the subsequent GST refund claims submitted by the exporters.”
In total, Tan and Yeo’s actions resulted in the submission of fraudulent GST refund claims amounting to about S$7.53 million. Of that sum, IRAS had paid out about S$2.04 million in GST refunds.
The police and IRAS warned that they take a serious stance against GST missing trader fraud offences and that they would take stern enforcement action against perpetrators of such fraudulent arrangements.
From Jan 1, 2021, any GST-registered business that claims input tax on any supply made to them which it knew or should have known to be part of a missing trader fraud arrangement will be denied input tax and subject to a 10 per cent surcharge on the input tax denied. 
The authorities strongly advised businesses to perform due diligence checks and take the appropriate actions to address the risk identified, in order to avoid participating in transactions suspected to be part of a missing trader fraud arrangement.