Local companies abusing productivity schemes

Despite more companies tapping on productivity grants offered by the government, some have been found to have made fraudulent claims.

The Inland Revenue Authority of Singapore (Iras) found one third of audited companies had mistakes in their claims, The Straits Times reported.

Iras concluded a majority of mistakes were a result of carelessness, although there was a small a portion of them found guilty of cheating. In the past two years, two of 60 cases investigated by Iras have resulted in court cases.

While it was not revealed how many claims were audited, Iras said firms were given a warning and told not to repeat the same mistake again.

Consultants guilty of fraudulent claims were found to be careful enough "not to leave a paper trail" although Loh Lee Kim, assistant commissioner of Iras, told ST these cases are still "akin to fraud".

Chan Chong Beng, president of the Association of Small and Medium Enterprises (ASME), said smaller SMEs were "genuinely ignorant", as they depended on consultants to do most of the paperwork.

"They should not abuse the scheme, which is designed to help them in the first place," he added.

The number of SMEs using the Productivity and Innovation Credit scheme, which grants tax subsidies or cash payouts to encourage firms to take steps towards boosting productivity, rose by 21% from 36,400 in 2011, to 44,000 in 2012.

Some of the common abuses identified by Iras included claims for items and services not covered by the scheme, not providing sufficient information to back up claims, and the creation of false records.