The taxman has exercised his new powers of arrest for the first time in raids that rounded up 10 people suspected of being key members of a syndicate involved in illegal goods and services tax (GST) refund claims.

The raids were carried out on Oct 23 and 24 at 36 businesses in 73 locations, including Kallang Pudding, Tampines and Choa Chu Kang.

About 200 electronic devices as well as business records were seized in the operation and 41 people are assisting with investigations, including the 10 who were arrested, the Inland Revenue Authority of Singapore (Iras) said yesterday.

The fraud in cases of this nature usually involves multiple businesses selling and exporting goods to each other without paying GST.

But they still claim the GST paid on the exported goods, effectively seeking a refund on amounts the tax authority never received.

Iras acquired arrest powers under the amended GST Act, which came into effect on Jan 1.

It allows authorised officers to arrest, without warrant, any person they believe has sought or obtained illegal tax refunds.

They can also arrest anyone who possesses goods that can be seized for such tax fraud, or anyone who has made fraudulent claims in connection with any refund.

Anyone who wilfully evades or assists any other person in evading GST faces a penalty of up to three times the amount of the tax evaded, a fine of up to $10,000 and a jail term of up to seven years.

Mr Lawrence Eng, assistant commissioner of Iras' Investigation and Forensics Division, said tax evaders are becoming more sophisticated.

"Today, we deal with more syndicated groups whose members may have been involved in past criminal activities," he added.

"Some suspects can be very uncooperative; they try to destroy paper documents or refuse to hand over evidence.

"With our new powers of arrest, our investigators can be more effective in bringing the perpetrators to justice," he said.