SINGAPORE – The taxman disbursed $4.6 billion worth of grants to around 120,000 businesses in 2023, but that huge amount was put in the shade by the sums outlaid when the pandemic was raging.

The Inland Revenue Authority of Singapore (Iras) dished out about $27.6 billion to more than 150,000 businesses in 2020, when Covid-19 was at its height, Parliament heard on Feb 16.

Second Minister for Finance Chee Hong Tat made the comments as Parliament passed the Iras (Amendment) Bill.

The amendments grant Iras the powers of administering scheduled public schemes for the Government, or any other statutory body. 

They will also empower it to investigate fraud and abuse and to recover grant funds that were disbursed wrongly. The new powers will allow it to access premises, conduct inspections, seize documents and make arrests.

The taxman has been disbursing broad-based grants – these include the Progressive Wage Credit Scheme, Senior Employment Credit and CPF Transition Offset – to businesses over the past decade. They are given out automatically and firms do not have to apply, as government data is used to determine which firms are eligible and the amounts they get.

This is in contrast to application-based grants where government officials assess the merit of each application.

Mr Don Wee (Chua Chu Kang GRC) asked why Iras needs enforcement powers to audit and investigate cases of grant fraud and abuse.

Mr Chee responded by noting that Iras currently “lacks the legislative levers” to do so, and these cases have to be referred to the police.

“As the volume of grants disbursed by Iras increases, Iras will need to have the necessary powers to conduct investigations more effectively, recover public funds and safeguard public interest,” he noted, adding that tax officials are already investigating offences under the Income Tax and Goods and Services Tax Acts.

Mr Chee said safeguards are in place so that only trained officers authorised by the Commissioner of Inland Revenue can conduct investigations.

He assured Mr Wee that the amendments included measures to protect the identity of whistleblowers or informers.

Workers’ Party MP Louis Chua (Sengkang GRC) and Mr Sharael Taha (Pasir Ris-Punggol GRC) asked for updates on fraud and abuse cases involving grants given out during the Covid-19 period and the amounts recovered.

Mr Chee said 25 cases of suspected fraud were referred to the Commercial Affairs Department by Iras between August 2020 and December 2023.

Investigations into four cases that involved payouts of approximately $120,000 under the Jobs Support Scheme had concluded.

Three cases resulted in charges and convictions and one resulted in a conditional warning, Mr Chee added, noting that none of the $120,000 was disbursed as Iras had detected the fraud. 

Mr Chee said the changes to the Act will give the taxman powers to impose penalties for offences.

Those convicted may 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 not exceeding three years.

The exact punishments will be decided by the courts and will be aligned with the penalties for similar offences under the Income Tax and GST Acts, Mr Chee added.

However, certain cases of wrong payments may be genuine mistakes or based on outdated data, but these represent a small minority of the total amount of grants disbursed, Mr Chee said.

The Auditor-General’s Office found that only around 0.5 per cent of the $31.5 billion paid out in grants during the pandemic were made wrongly, he added. 

If firms judged to have received grant funds in error do not repay the money within the prescribed repayment period – usually 30 days – interest will be imposed based on the government rate on instalment payments plus an additional 3 percentage points.

Mr Chua pointed out that the timeline might be too tight for companies that have cashflow problems, or small and medium-sized enterprises that may not have established administrative and finance processes in place.

Mr Chee said businesses that disagree with an Iras assessment of wrongful disbursement can appeal, but if their appeal is rejected and they do not repay the money, the tax agency may pursue legal action.