SINGAPORE - Tax enforcement officers may soon be able to forcibly enter premises, arrest without warrant or conduct body searches of suspects in order to investigate serious tax crimes, according to changes proposed to the Goods and Services Tax (GST) Act.

These enhanced powers are to counteract syndicates and recalcitrant taxpayers, who are becoming more active and are employing more sophisticated strategies for tax fraud, said the Finance Ministry in a statement on Thursday (June 28).

Sellers have been detected committing tax fraud by absconding with collected GST or fabricating GST refund claims. They may refuse to hand over evidence and attempt to destroy them instead, or contact other suspects to corroborate statements, said the ministry.

"Such acts of non-cooperation affect Iras' effectiveness in bringing the perpetrators to justice," said the statement.

These powers in the draft Bill will be exercised only by trained investigation officers from the Inland Revenue Authority of Singapore (Iras), the Republic's tax authority, and used only where necessary so that investigations are not impeded.

Documents or items seized during an investigation may also be disposed of if the owner fails to collect them at the end of the investigation.

Besides giving officers increased powers, the changes also allow Iras to share information with law enforcement agencies if it decides that such information is critical for investigation or prosecution of serious crimes which may not be tax-related, such as drug dealing or corruption.

Iras was previously able to do this under limited circumstances, such as when it is ordered by the courts.

The Finance Ministry is also looking to tighten rules surrounding unauthorised GST collection by introducing a custodial sentence for offenders who do not have a reasonable excuse or are negligent.

The ministry will also introduce a new offence aimed at GST-registered businesses which collect more GST than is allowed under the law.

The proposed amendments also set out details of how the Government intends to tax foreign firms that provide digital services here, a move previously announced in this year's Budget.

To take effect from 2020, the changes will ensure that overseas suppliers and electronic marketplace operators which supply a significant amount of digital services to Singaporeans will have to register with Iras and collect GST.

For business-to-business imported services, a GST-registered business customer will be required to account and pay GST to the tax authority on imported services. However, the ministry said this will not affect most GST-registered businesses here as they can claim full refund of the incurred GST from their purchases.

"Businesses affected are primarily financial institutions and residential property developers, which do not get such full refund as they make GST-exempt supplies," said the ministry.

The ministry is inviting interested parties to provide feedback on the draft Bill from June 28 to July 18.