The Inland Revenue Authority of Singapore (IRAS) has highlighted four areas currently receiving increased attention in its GST audit programme: missing trader fraud arrangements, low-value GST refund claims, sales of non-residential properties and the under-reporting of taxable supplies by sole proprietors.
Businesses operating in these areas should review their GST controls, supporting documentation and previously filed returns to identify potential errors before an audit commences.
Four Key GST audit focus areas
1. Missing trader fraud arrangements
IRAS continues to scrutinise transactions that may form part of missing trader fraud arrangements. Businesses may become involved in such schemes through purchases from suppliers whose transactions lack commercial substance or form part of an artificial supply chain.
GST-registered businesses should therefore perform appropriate checks on new and existing suppliers, particularly where transactions involve unusual pricing, rapid movement of goods, unclear payment arrangements or counterparties with limited commercial presence.
The consequences may extend beyond ordinary GST adjustments. IRAS may withhold refunds, reject input tax claims and impose penalties or surcharges where a business knew, or should reasonably have known, that its purchases were connected with such an arrangement. Serious involvement may also result in criminal prosecution.
2. Low-value GST refund claims
The audit programme also covers GST-registered businesses that regularly submit relatively small refund claims. The value of a claim should not be taken as an indication that it is unlikely to be reviewed.
During an audit, IRAS may inspect the business premises, interview relevant personnel, examine accounting records and require the business to review earlier GST returns.
Common risk areas include:
- input tax claims that are not supported by valid tax invoices or import permits;
- GST claimed on private, medical, motor vehicle or other disallowed expenditure;
- claims submitted by dormant or inactive businesses without corresponding taxable activities; and
- zero-rated export sales that are not supported by sufficient evidence that the goods were exported. (Default)
Businesses should ensure that refund positions can be reconciled to their general ledger, purchase records, tax invoices, import documentation and evidence supporting zero-rated transactions.
3. Sales of non-residential properties
GST-registered businesses are generally required to charge and account for output tax when disposing of non-residential properties held as business assets. This may apply even where property transactions are not part of the entity’s principal business activities.
Particular attention should be given to the time at which GST becomes reportable. For option fees and deposits, the relevant point is generally the earlier of receiving payment or issuing the corresponding invoice. For the balance of the purchase price, GST may become due upon invoicing, receipt of payment, legal completion or the property being handed over or made available to the buyer, whichever occurs first.
Transfers made without monetary consideration may also have GST implications where input tax was previously claimed on the acquisition of the property.
4. Under-declaration of supplies by sole proprietors
A GST registration for a sole proprietor applies to the individual rather than separately to each registered business name. Consequently, taxable turnover from all sole-proprietorship businesses and other taxable activities carried on by that individual must be considered collectively.
Potential omissions may include:
- revenue earned through another sole-proprietorship business;
- income from freelance, professional or self-employed activities;
- taxable property rental or disposal income;
- sales of furniture and fittings connected with property activities; and
- proceeds from business assets for which input tax was previously claimed.
Sole proprietors should therefore avoid preparing GST returns solely from the records of one business operation without considering their other income-generating activities.
Impact on businesses and financial reporting
The increased audit focus reinforces the need for GST reporting to be integrated with financial accounting records rather than treated as a separate filing exercise.
Businesses may need to:
- strengthen reconciliations between GST returns, revenue accounts, purchases, property records and bank transactions;
- recognise provisions for potential tax exposures, penalties or professional costs where material errors are identified;
- assess whether rejected input tax claims should be recorded as additional expenses or asset costs;
- evaluate whether historical errors affect reported liabilities, cash flows or management accounts; and
- provide auditors with evidence supporting significant GST balances, refunds and unusual transactions.
Repeated GST errors may also indicate broader weaknesses in financial controls, supplier onboarding, invoice processing or revenue recognition procedures.
Practical issues
Businesses and their advisers may face several implementation challenges:
- Fragmented accounting records: Transactions may be recorded across multiple accounting systems, business names or personal records, making completeness difficult to establish.
- Insufficient supporting documents: Tax invoices, import permits, export evidence and property completion documents may be incomplete or difficult to retrieve.
- Supplier due diligence: Businesses may not have formal procedures for evaluating whether suppliers and transactions are commercially genuine.
- Classification uncertainty: Determining whether expenditure is business-related, private or specifically disallowed may require judgement.
- Property transaction timing: Legal completion dates, payment dates and invoice dates may fall in different GST accounting periods.
- Historical corrections: Reviewing past returns can be resource-intensive, particularly where errors occur repeatedly across several periods.
- System limitations: Accounting software may not consolidate all activities conducted by a sole proprietor or automatically identify transactions requiring special GST treatment.
Action points
GST-registered businesses should conduct a targeted review of the four audit areas and document the work performed. The review should include transaction-level testing, reconciliation of GST returns to accounting records and confirmation that supporting documents are complete.
Where errors are identified, businesses should quantify the exposure and consider making a voluntary disclosure promptly. IRAS indicates that taxpayers may qualify for reduced penalties when errors are voluntarily reported, subject to the applicable conditions.
Businesses should also update their GST control procedures, assign clear responsibility for return preparation and approval, and seek professional advice where transactions involve complex supply chains, property disposals or multiple business activities.
Incorrect GST returns may result in penalties of up to twice the amount of tax undercharged. A taxpayer may also face, upon conviction, a fine of up to S$5,000, imprisonment of up to three years, or both, depending on the circumstances.
Source: IRAS, 24 July 2026.