Wednesday, April 9, 2014

Singapore Straits Times article - Tax Cheats

Singapore Straits Times reported a news today relating to tax cheats in Singapore where certain individuals are targeting at government scheme or incentives roll out by Singapore government. It is reported that some of the individual used fictitious invoices to claim productivity and innovation credit scheme ("PIC")

There are certain cash payout or enhanced deduction if the Company invested in specific items ( for example, IT and automation equipment approved by IRAS). It is reported that some individuals have fictitiously claimed the PIC benefit with fictitious invoices - i.e. they may not have purchased the items specified by IRAS, but had proceed to claim benefit.

Some individuals had been charged because of the matters above. This matter have the following implication to us, as the auditor:

- while reviewing the PIC claims, we should also maintain professinal skepticism if the PIC claims is supported by appropriate purchases of specific equipments;
- to consider the sighting of equipments if material;
- to assess if the items the Company is claiming qualify under PIC scheme - as only specific items are eligible for PIC
- to review if the Company has developed a process to monitor this PIC scheme

Given that there could be incentives for individual to claim deductions - it is important for the auditor to maitain skepticism in this area of work.

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