Businessman jailed for 24 weeks and ordered to pay penalty of $517k for GST fraud

Foo Tee Suan, 54, was jailed for 24 weeks and ordered to pay a penalty of $516,945 on Friday (Oct 20). ST PHOTO: WONG KWAI CHOW

SINGAPORE - A businessman who committed 54 counts of making false entries in his Goods and Services Tax returns was jailed for 24 weeks on Friday (Oct 20).

The false entries resulted in GST refunds totalling $458,020.

Foo Tee Suan, 54, who admitted to 18 charges of GST evasion involving $172,315 undercharged, was also ordered to pay a penalty of $516,945. This is three times the amount of tax undercharged.

He made false entries in the GST returns of FTH Enterprise, which deals with general contractors, as well as F&T Top System Enterprise and Hwa Rong Import & Export and Hwa Rong Enterprise, which are general wholesale companies, between 2005 and 2007.

Foo was the owner of FTH; a partner of F&T and Hwa Rong Import & Export; and a director of Hwa Rong Enterprise.

Thirty six other similar charges were taken into consideration in sentencing.

During one of its regular audits of GST-registered businesses, Inland Revenue Authority of Singapore (Iras) auditors found that Foo had made false entries in the GST returns of F&T.

The audit further discovered that Foo had also made false entries in the GST returns of three other business entities that he was involved in.

His scheme to commit GST tax fraud first began when one Eric Chia Puay Yeoh told Foo that the latter should voluntarily register his export business, FTH Enterprise, for GST so that FTH could claim fictitious GST refunds. There are no details available on Mr Chia and his relationship to Foo.

GST-registered businesses are allowed to offset the GST they pay for their purchases (input tax) against the GST they collect from sales (output tax). They pay the net difference to Iras.

Those who incur more GST on purchases than they collect from their sales can claim the difference from Iras in the form of GST refunds.

Subsequently, Foo set up three other entities that were all shell companies.

He signed blank GST return forms for the four businesses and provided Mr Chia with his SingPass details for the latter to e-file the GST return forms for the four firms.

Foo agreed to do so in order for Mr Chia to claim fake GST refunds on the former's behalf. This in turn would allow Foo to raise money to invest in Mr Chia's import/export business in East Timor.

To illegally obtain GST refunds, Mr Chia declared fictitious figures in the GST returns and fraudulently claimed a total of $457,750 in GST refunds.

Foo benefited from the fictitious GST refunds that Mr Chia obtained and used some of the money for his own personal expenses, though there are no details on how much Foo received.

In July 2014, Mr Chia, now 53, was jailed 15 months and ordered to pay a penalty of over $1.2 million for masterminding a scam to claim GST refunds using multiple shell entities.

He had colluded with three accomplices, including Foo, to defraud the taxman of more than $950,000.

Foo has made full restitution of the GST refunds for FTH, F&T and Hwang Rong Import & Export. For Hwa Rong Enterprise, he still owes $52,172.

District Judge Adam Nakhoda said that had there been no restitution, he would have sentenced Foo to 40 weeks' jail. Taking into consideration the mitigating factors, the court arrived at the lower end of sentencing of six weeks per charge.

In a statement on Friday (Oct 20), Iras said it is a serious offence to claim GST input tax on fake purchases or understate output tax on sales.

Offenders face a penalty of three times the amount of tax undercharged, a fine of up to $10,000, and/or a jail term of up to seven years.

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