Singapore considers GST fraud domestic reverse charge
- May 20, 2017 | Richard Asquith
Singapore is looking at introducing the domestic reverse charge on products susceptible to missing transfer GST fraud. Initially, the mechanism will apply to mobile phones, memory cards and off-the-shelf software.
Missing trader fraud schemes involve criminals claiming they have exported goods, which are therefore GST exempt. However, in reality, the goods are sold in Singapore with 7% GST, but the tax is kept by the fraudsters. In the EU, this type of VAT fraud is believed to cost the 28 member states up to €50billion per annum in lost taxes.
The domestic reverse charge removes the cash payment element of the transaction. It obliges the buyer to record the purchase and sale (on behalf of the seller) for VAT reporting purposes.