Goods and Services Tax Act amended from 1 January 2021 to enhance Comptroller’s powers to counter fraud and investigate tax offences

28 January 2021

Effective from 1 January 2021, the Goods and Services Tax Act (“Act”) has been amended to enhance the powers of the Comptroller of Goods and Services Tax (“Comptroller”) to safeguard public monies, investigate tax offences and counter Goods and Services Tax (“GST”) fraud.

The following are among the changes to the Act:

• Countering missing trader fraud: A taxable person is disentitled from claiming any credit for input tax on a supply made to the taxable person, if the taxable person knew or should have known that the supply was a part of what is commonly known as “missing trader fraud”. Illustrations of missing trader fraud are provided in the new Ninth Schedule to the Act and guidance for determining who is regarded as a person who “should have known” is provided in section 20 of the Act. Further, a new section 45A of the Act provides for a surcharge of 10% of the amount of input GST denied for a business who should have known the purchase was part of or connected with a fraudulent arrangement.
• Enhancing IRAS’ powers to seize goods for investigation of tax offences: The Inland Revenue Authority of Singapore (“IRAS”) may seize goods that are suspected to be used or intended to be used by a person to commit an offence under the Act, or which are suspected to constitute evidence of an offence under the Act, or which may aid in the investigation or prosecution of such offence.
• Counteracting tax avoidance arrangements: To further deter tax avoidance arrangements, a surcharge is introduced equal to 50% of the amount of additional GST imposed by the Comptroller as a result of the adjustments made to counteract the tax avoidance arrangement.

Reference materials

The following materials are available from the Singapore Statutes Online website sso.agc.gov.sg:

• Goods and Services Tax Act
• Goods and Services Tax (Amendment) Act 2020