SINGAPORE - A sole director and shareholder of a wholesale trading firm was allegedly involved in a case of goods and services tax (GST) fraud linked to nearly $252 million in fictitious sales.

Tan Tuan Heng, 45, from Brillantec Solutions, is accused of carrying out the ruse by trading in electronic goods between October 2012 and June 2014.

He allegedly made false entries in the firm’s GST returns to evade taxes totalling more than $4.2 million.

He was hauled to a district court on April 9 and faces more than 20 charges for offences including cheating and tax evasion.

The police and the Inland Revenue Authority of Singapore (Iras) said in a joint statement that Tan’s case allegedly involved what was described as “missing trader fraud”.

In such cases, a group of businesses would typically form a supply chain through which goods are sold. At each stop along the supply chain, the seller charges GST on the goods sold.

“The original upstream seller then disappears without paying the collected GST to Iras, hence the term ‘missing trader’,” said the statement.

Meanwhile, the goods sold are purportedly exported by the last seller in the chain.

Since exports are zero-rated, this last seller does not collect GST on the exports. Instead, it claims a refund from Iras on the GST paid on its purchases of the goods.

The state will suffer a loss if Iras refunds this last seller, as the “missing trader” had not paid the GST it collected for its sale of the goods at the start of the chain.

The two agencies said that in some variations of the ruse, the goods can even be fictitious. There were also instances where the same goods were re-imported and re-exported multiple times.

Separately, Tan is accused of deceiving a man into believing he had genuine purchase orders for items that were not disclosed in court documents.

He is accused of cheating the man of more than US$457,000 (S$615,900) and over $256,000 between March 21 and April 11, 2018.

Tan’s pre-trial conference will take place on April 11.

If convicted of cheating, he can be jailed for up to 10 years and fined.

For each count of tax evasion, an offender can be jailed for up to seven years and fined. The offender can also be ordered to pay a penalty three times the amount of taxes undercharged.