IRAS given greater powers to administer government grants, investigate fraud and abuse

SINGAPORE: The Inland Revenue Authority of Singapore (IRAS) was given more powers on Friday (Feb 16) to administer public schemes for and on behalf on the government and other statuary bodies.

This formalises its role as a grant disbursement agency alongside its current role as tax administrator.

The IRAS (Amendment) Bill, which was passed in Parliament on Friday, also grants the taxman powers to investigate fraud and abuse of enterprise grants, and to recover grant funds that were disbursed wrongly.

In his opening speech of the second reading of the Bill in Parliament, Second Minister for Finance Chee Hong Tat explained that over the last decade IRAS had taken on the complementary function of disbursing broad-based grants to businesses, such as the Progressive Wage Credit Scheme.

In 2023, IRAS disbursed S$4.6 billion (US$3.4 billion) worth of grants to more than 120,000 businesses.

But at the height of the COVID-19 pandemic, it disbursed six times that amount to more than 150,000 businesses.

"Given the continued importance of this function, both in steady state and in crisis, the proposed amendments to the IRAS Act aim to formalise IRAS’ role as a grant disbursement agency, alongside its role as tax administrator," said Mr Chee.

With its new formalised role, IRAS will have more powers to investigate serious grant offences, allowing it to access premises, conduct inspections, seize documents and make arrests.

Mr Chee noted IRAS currently lacks "the legislative levers" to investigate fraud and abuse pertaining to grants, adding that such cases have to be referred to the police for investigation.

IRAS’ new enforcement powers are similar to its existing powers under the Income Tax and GST Acts, where IRAS investigators are empowered to investigate tax offences.

As such, it will now be an offence to interfere with or refuse to comply with IRAS’ investigation of serious grant offences, said Mr Chee.

Those found guilty of the offence can be fined up to S$10,000 and/or be jailed up to 12 months.

Specific offences and punishments for obtaining or assisting another person to obtain a grant under the scheduled public schemes have also been set out.

Depending on the severity of the offence, those convicted will be liable to a penalty equal to one, two or three times the grant amounts that were overpaid or would have been overpaid; and a fine and/or imprisonment.

These penalties are aligned with the penalties for similar offences under the Income Tax and GST Acts, Mr Chee said.

Most grants are disbursed automatically by IRAS, where government administrative data is used to determine firm eligibility and grant quantum. 

However, certain recipients might receive more grants than they are entitled to due to errors or if the eligibility assessment and grant quantum were computed based on outdated data.

“As these are public funds, even if the error was no fault of the recipients, they have a responsibility to return the overpaid amounts,” said Mr Chee.

He added IRAS’ new legal powers, including the imposition of interest for late repayment, signal the "serious nature of the issue" and will encourage firms to return any overpaid monies in a timely manner. 

FRADULENT COVID-19 GRANTS

MPs Louis Chua (WP-Sengkang) and Sharael Taha (PAP-Pasir Ris-Punggol) asked for an update on fraud and abuse cases involving COVID-19 grants and the monies recovered.

From August 2020 to December 2023, IRAS reported 25 cases of suspected abuse or fraud to the police's Commercial Affairs Department (CAD) and that investigations into four cases involving payouts of approximately S$120,000 under the Jobs Support Scheme had concluded, Mr Chee said. 

He added that three cases led to charges and convictions, while one case received a conditional warning, and that none of the S$120,000 was disbursed as IRAS had detected the fraud early.

The remaining 21 cases reported by IRAS are currently being investigated by CAD. As for wrongly paid grants, these are a "small minority" of the total amount of grants disbursed, Mr Chee said. 

MP Don Wee (PAP-Chua Chu Kang) also asked about the need to grant such strong enforcement powers to IRAS to audit, and investigate cases of fraud and abuse. 

Measures are in place to ensure only trained officers authorised by the Commissioner of Inland Revenue can conduct investigations, said Mr Chee, adding that the amendments also serve to protect the identities of whistleblowers or informers.