20 June 2018
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Taxman recovers $35m from cheats

Straits Times
09 Jun 2018
Aw Cheng Wei

Raids, forensics tech employed as cases of evasion increase and get more complex

Tax scams may be getting more sophisticated, but this did not stop the taxman from recovering $35 million in taxes and penalties last year from cheats.

Investigators had looked into 243 cases, more than double the 120 from the year before when they were able to claw back $20 million for the state coffers.

Overall, the taxman recovered $384 million from 10,726 cases of non-compliance, a 15.7 per cent increase over the $332 million in 2016 involving 10,626 cases, according to the latest figures from the Inland Revenue Authority of Singapore (Iras).

For the most serious tax crimes, investigators would raid the premises involved to ensure the suspects do not tip off each other, said Mr Low Han Hsien, Iras director of investigations and forensics.

Such an operation was conducted yesterday on a restaurant in the north. Three teams of investigators fanned out simultaneously to the restaurateur's home, workplace and his supplier. Investigators accompanied a man, believed to be the eatery's boss, to the restaurant at about noon.

During the four-hour sting, they looked for evidence of tax evasion in ledgers, smartphones and laptops. At the eatery, investigators, donning Iras vests over their office wear, approached employees for permission to go through the business records. At the supplier's office, an employee was told to show them electronic records on a computer.

While most suspects are cooperative, investigators are taught to handle resistance. "We are even trained in self-defence," Mr Low said.

Before any raid, the investigators would check the best time to launch an operation. Mr Kenny Hor, manager in Mr Low's division, said: "We don't want to disrupt peak-time business. Raids involve interviews, so if suspects are busy, it is not the best time for them to talk."

Between 60 and 70 raids are carried out a year.

Investigators are usually alerted by whistleblowers, or discrepancies flagged by Iras' analytics system when it goes through tax records, Mr Low said. This is then followed up with audit checks and research.

Tax crimes are becoming more complex, Mr Low said, highlighting a rise in non-traditional cases. These include scams to cheat the Government out of grants it offers.

For instance, one involves the abuse of goods and services tax (GST) refunds. Companies are allowed to claim refunds when they pay more GST on the products they bought or imported, than the amount of GST they collected.

But some companies collude to make up fake transactions to get refunds they are not entitled to.

The growing prevalence and discovery of such scams is behind the spike in taxes and penalties the Iras collected. Yesterday's sting yielded 70 boxes and 15 bags of accounting records, which investigators will examine, said Mr Low.

Mr Hor gave short shrift to the tax cheats, saying: "By being dishonest, tax evaders impose an unfair burden on those who meet their obligations."


10,726

Cases of non-compliance last year.

$384m

Amount the Inland Revenue Authority of Singapore recovered in taxes and penalties for the state's coffers.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.