Tax enforcement officers are to be given more powers to investigate serious tax crimes, under proposed changes to the Goods and Services Tax (GST) Act.
These include powers to enter premises forcibly, arrest without warrant and conduct body searches of suspects.
The Finance Ministry said yesterday that they are needed to counteract the growing menace posed by syndicates and recalcitrant taxpayers, who are also employing more sophisticated strategies for tax fraud.
It cited cases of sellers committing tax fraud by absconding with the GST monies they had collected or fabricating GST refund claims.
And they would try to destroy the evidence or contact other suspects to corroborate their statements, said the ministry.
"Such obstructionist acts impede investigations and affect the Inland Revenue Authority of Singapore's (Iras) effectiveness in bringing the perpetrators to justice," a ministry spokesman told The Straits Times.
He also said that the proposals are in line with the powers gran-ted to the tax authorities in Britain and the United States.
"Tax evasion is a serious criminal offence which is comparable to cheating offences, and warrants extensive investigations and firm interventions," he added. Obtaining a tax refund improperly is also seen as a serious crime.
Similar investigative powers were also mooted last week in the draft Income Tax (Amendment) Bill, which is undergoing public consultation.
The new powers are among several changes set out in a draft Goods and Services Tax (Amendment) Bill for people to give their feedback.
The Bill is prompted by an uptrend in sophisticated GST fraud schemes detected by Iras.
In 2017, Chen Juncun, a director of two companies, was jailed for eight weeks and fined about $80,000 for evading up to $26,000 in GST. He had overstated the input tax and made fictitious declarations of GST refund claims by fabricating transactions between his two companies.
Other proposed changes include letting Iras share with law enforcement agencies information it deems critical for their investigation or prosecution of serious crimes which may not be tax-related, such as drug dealing or corruption.
Currently, Iras is able to do this under limited circumstances, like when it is ordered by the courts.
The Bill also calls for a custodial sentence for offenders who do not have a reasonable excuse or are negligent in the unauthorised collection of GST.
KPMG's partner and head of indirect tax Lam Kok Shang said that, if passed by Parliament, the enhanced measures will help resolve the question of speed faced by investigators, as perpetrators can destroy evidence and flee the country before the authorities can nab them.
Providence Law Asia's Mr Eugene Lim said that if the fraudsters are not stopped, the tax base will shrink and the Government may have to raise taxes.
Mr Lim, who specialises in international tax and trade law, said: "Taxpayers and honest businesses will likely suffer a bigger tax burden while the evaders get to enjoy government services without paying their dues."
The proposed amendments also spell out how the Government intends to tax foreign firms that provide digital services here, a move announced in this year's Budget.
They are set to take effect from 2020, to ensure overseas suppliers and electronic marketplace operators that supply a significant amount of digital services to Singaporeans register with Iras and collect GST.
Tax experts said the Government may have greater success in enforcing the rules on big foreign players like Netflix than on the smaller ones as major corporations will not risk enforcement action or damage to the reputation of their global operations.
Mr Lam suggested watching how these rules pan out in other countries, citing Australia, which will impose GST on all overseas purchases of low-value goods from July 1.
People can give feedback on the draft Bill until July 18. The GST (Amendment) Bill is slated to be introduced in Parliament in October.