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Two men — one 40, the other 73 — were about to be charged in court for their suspected role in a GST Missing Trader Fraud scheme worth $181 million.

Think about that number for a second, SGD 181 million. The alleged fraud wasn’t about sophisticated offshore structures or hidden assets. Instead, it came down to something deceptively simple: fictitious sales.

In this article, we’ll break it all down:  the mechanics of such fraud, what this particular case signals for the business landscape in Singapore, and the steps you can take to stay compliant.

How did the fraud work?

In early August 2025, Singapore’s Commercial Affairs Department (CAD) and the Inland Revenue Authority of Singapore (IRAS) announced charges against two men — aged 40 and 73 — for their suspected involvement in a Goods and Services Tax (GST) Missing Trader Fraud scheme worth approximately $181 million.

The case is one of the largest of its kind in recent years and serves as a strong reminder for businesses about the risks of fraudulent arrangements and the importance of due diligence.

At the centre of the alleged scheme were four shell companies set up between November 2017 and April 2018.

Here’s how investigators believe the fraud was carried out:

1. Goods were “sold” between these shell companies at highly inflated prices.
2. The sales and purchases were not genuine business activities but were created to give the appearance of trade.
3. These false transactions were then used to submit claims to IRAS, attempting to recover millions in GST refunds that were never actually due.

In total, the men allegedly tried to cheat IRAS into disbursing $11.8 million in fraudulent GST refunds.

In addition, the 40-year-old man is accused of going even further by:

1. Falsifying a supplier’s invoice to support a GST registration application.
2. Abusing the Electronic Tourist Refund Scheme (eTRS): Submitting three fake tourist refund claims worth more than $140,000.
3. Filing multiple fraudulent refund applications to extract cash from IRAS.

Potential penalties they must face

If convicted, both men face heavy penalties:

• Fraudulent trading (Companies Act, Section 340): Up to 7 years’ imprisonment, a fine, or both.
• Forgery (Penal Code, Section 468): Up to 10 years’ imprisonment and a fine.
• Cheating / Attempted cheating (Penal Code, Section 420 & 511): Up to 10 years’ imprisonment and a fine.

These penalties underscore how seriously Singapore takes financial and tax-related offenses.

What are fictitious sales?

Fictitious sales are transactions that exist only on paper. They may involve:

• Fake invoices – documentation that appears to show sales that never occurred.
• Inflated prices – goods sold at abnormally high prices to exaggerate the size of transactions.
• Circular trading – companies repeatedly “selling” goods to one another without any real transfer of goods or services.

The purpose of fictitious sales in this case was to create the illusion of business activity and claim GST refunds from the government. By showing “input tax” on these sham purchases, fraudsters attempted to cheat IRAS into paying money they were never entitled to.

For businesses, the danger is that even if you unknowingly participate in such a chain of transactions, you could still face penalties if you fail to spot the red flags.

To address this, Singapore has introduced stricter measures:

1. Since 1 January 2021: Any GST-registered business that knew, or should have known, that its transactions were linked to a Missing Trader Fraud scheme will have input tax claims denied — plus a 10% surcharge on the denied amount.
2. Since 1 January 2023: Anyone who knowingly participates in a fraudulent GST arrangement faces a fine of up to $500,000, 10 years’ jail, or both.

If you are GST-registered, here are some practical steps you should take:

• Make sure they are legitimate businesses with a real presence (Check their address, their connections, and verify via third parties like banks, payment institutions, government agencies site).
•  Be cautious of deals that seem unusually profitable or involve inflated pricing (They earn more than your typical profit margin).
• Use IRAS’ e-Tax Guide on Due Diligence Checks to identify red flags.
• Maintain clear documentation and keep financial records for at least 5 years to demonstrate that your transactions are genuine.

For more information, please refer to the e-Tax Guide GST: Guide on Due Diligence Checks to Avoid Being Involved in Missing Trader Fraud.

What is more, there is a hidden revenue threshold most Singapore companies are not even aware of when it comes to GST.

Beware of the $1 Million GST registration threshold

What many business owners don’t realise is that GST registration in Singapore becomes compulsory once your taxable turnover exceeds S$1 million in a 12-month period.

IRAS guideline on compusory GST registration

• Even if your business is legitimate, failing to track your sales accurately can cause you to cross this threshold without registering on time.
• If you continue invoicing and collecting payments without registering and charging GST, you face penalties from IRAS even if it was unintentional.

Unfortunately, many SMEs are simply not aware of this rule or don’t have proper systems to monitor their turnover closely.

If you are running a business in Singapore, you must:

• Record every transaction properly.
• Track total turnover against the S$1 million threshold.
• Keep clean, organised invoices and sales records to prove compliance.
• Handle GST registration and filing on time, avoiding unnecessary penalties.

When done right, these steps not only keep you compliant but also protect your reputation in the eyes of regulators, partners, and customers.

To learn more about GST in Singapore, you can read our article about Goods and Services Tax here.

How can we help you

We understand that for many busy business owners, keeping up with tax rules, GST thresholds, and compliance requirements can feel overwhelming.

If you’re unsure whether you’re at risk of crossing the S$1 million GST registration threshold or whether your current record-keeping is sufficient, that’s where we come in.

We can help you

1. We explain the rules in simple terms so you know exactly what applies to your business.
2. We help you set up a proper tax recording system to capture every sale and purchase.
3. We review your invoices and transactions to ensure they meet IRAS requirements.
4. From GST registration to quarterly/annual filing, we handle the process so you can focus on running your business.

If your company needs help filing taxes for the year 2025 or requires assistance with Singapore incorporation, economy, banking, etc., feel free to call /WhatsApp us at +65 90612851 or email us at aceglobalacct@gmail.com. Alternatively, you may leave us a reply using our contact form below.

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