The Inland Revenue Authority of Singapore (IRAS) has refreshed its GST audit guidance, highlighting four key compliance risk areas while introducing clearer explanations of taxpayers' obligations, common errors, enforcement actions and penalties. The updated guidance also encourages businesses to review their GST reporting and make voluntary disclosures where mistakes are identified to mitigate potential penalties.
The Inland Revenue Authority of Singapore (IRAS) updated its guidance on the Current Areas of GST Audits, introducing clearer content, improved readability and new sections explaining the actions taxpayers should take and the consequences of errors or involvement in each audit area.
The revised guidance continues to focus on four key areas: Missing Trader Fraud (MTF) Arrangements, Businesses Making Low-Value GST Refund Claims, Sale of Non-Residential Property, and Under-Declaration of Supplies by Sole-Proprietors.
Missing trader fraud (MTF) arrangements
IRAS said taxpayers must conduct proper due diligence on all business dealings and carefully scrutinise the legitimacy of purchases to avoid being drawn into Missing Trader Fraud (MTF) Arrangements.
Businesses suspected of involvement may be subject to detailed audits and investigations, withholding of GST refunds, denial of input tax claims under the Knowledge Principle, and a 10% surcharge on denied claims.
The authority warned that criminal penalties may also apply.
Convictions can result in fines of up to SGD 50,000 and 12 months’ imprisonment for business owners or directors. Those found to be masterminds, co-conspirators or syndicate members may face fines of up to SGD 500,000 and imprisonment for up to 10 years.
Businesses making low-value GST refund claims
IRAS reminded GST-registered businesses claiming low-value refunds to verify that all input tax claims satisfy the required conditions and are supported by proper tax invoices, import permits or export documents where applicable. The authority said audits in this area may include visits to business premises, interviews with personnel and reviews of previous GST returns.
Common errors include claiming input tax for dormant businesses, submitting claims without the required supporting documents, claiming personal or disallowed expenses, and making zero-rated export claims without adequate export documentation.
Sale of non-residential property
The guidance also highlights compliance requirements for businesses selling non-residential property. IRAS said GST must be accounted for based on the consideration received and at the earliest applicable event, including receipt of payment, issuance of an invoice, transfer of title or handover of the property.
Common mistakes include treating business property as a personal asset and failing to charge GST, accounting for GST on option fees only when the sale is completed, and failing to account for GST on property transfers where no consideration is received despite input tax having previously been claimed.
Under-declaration of supplies by sole-proprietors
IRAS said sole proprietors must account for GST on all taxable turnover because GST registration is tied to the individual rather than a specific business. This includes turnover from all sole proprietorships owned by the individual, income from self-employed trades, professions or vocations, the sale or lease of qualifying non-residential properties, and proceeds from the disposal of assets where input tax was originally claimed.
Taxpayers are advised to review all income streams and GST returns to ensure taxable supplies and output tax are correctly reported.
Penalties and voluntary disclosure
For errors relating to Businesses Making Low-Value GST Refund Claims, Sale of Non-Residential Property, and Under-Declaration of Supplies by Sole-Proprietors, IRAS said businesses may face penalties of up to twice the amount of the undercharged tax, fines of up to SGD 5,000, and/or imprisonment for up to three years.
The authority encouraged taxpayers to review their records, correct any mistakes and make voluntary disclosures where appropriate, noting that reduced penalties may be available. The updated guidance forms part of IRAS’ ongoing efforts to strengthen GST compliance, reduce reporting errors and protect public revenue.
