Internal Revenue Commission’s (IRC) Commissioner General, Sam Koim, revealed that there are escalating instances of fraud discovered in the Goods and Services Tax (GST) declarations submitted to IRC.
He expressed that it is critical to understand that a tax return, whether signed by a taxpayer or a tax agent, is a binding declaration of the accuracy of the provided information, and false declarations have severe penalties.
“We have ramped up our vigilance, especially concerning GST credit returns.” He said.
He highlighted that IRC’s newly established Tax Crime Division is actively investigating several GST-related fraud cases and will soon initiate prosecutions.
Some fraudulent patterns detected by IRC are:
- Related Party Transactions
IRC uncovered multiple instances where related parties are fabricating invoices or supplies to artificially inflate their GST Suppliers’ Listings.
- Significant Variances Between GST and CIT
There are alarming discrepancies between GST declarations and Corporate Income Tax (CIT) returns. Certain taxpayers consistently report a credit position annually, which contradicts the nature of their business operations. Others show higher expenditures than earnings in their GST returns without corresponding income declarations in their CIT returns.
There are also numerous cases where taxpayers regularly file GST returns but neglect to submit their annual CIT returns. Some individuals declare income solely for GST refund purposes, leading to significant mismatches when CIT returns are not filed.
- Cash Income Not Returned
GST and CIT returns that most of the cash sales income are not declared. Some of those undeclared income finds its way in the expenditures listing, where taxpayer seems to spend more than the income declared.
Mr. Koim encouraged all taxpayers to do the right thing by making accurate declarations to the tax office.
“We are intensifying our efforts to detect and address fraudulent behaviors. The IRC is unwavering in its commitment to safeguarding the integrity of our tax system.” He warned.
