The fraudulent claims were made under the Productivity and Innovation Credit (PIC) scheme, which was introduced in 2010, the Straits Times said.
Iras has investigated 417 PIC claims to date and plans to reclaim cash payouts and bonuses worth SIN$10 million (US$7.4 million), according to the report.
Under the PIC scheme, businesses can request 400% tax deductions and/or 60% cash payouts for investments made in: leasing or acquiring IT equipment; acquiring intellectual property rights; registering patents and trademarks; research and development, staff training; and design projects approved by DesignSingapore Council, between 2013 and 2018.
The scheme has paid out SIN$2.9 billion in tax savings and cash payouts between 2011 and 2014, an Iras spokesperson told the Straits Times.
New laws were brought in last November to stop misuse of the scheme. Previously, companies only had to show that they had spent money, but now they must prove that any equipment is 'in use', the Straits Times report said.
Minimum ownership periods apply to businesses seeking to make a PIC claim for IT equipment or in relation to intellectual property rights. For claims relating to IT and automation equipment, businesses must have owned the kit for at least a year to be eligible for PIC benefits. For PIC claims relating to the registration and acquisition of intellectual property rights, companies must have owned those rights for at least a year and five years respectively.
As an example of how the scheme has been abused, the Straits Times cited one company that claimed a cash payout for computer equipment worth more than $193,000. In reality it bought used equipment for $1,500.
Iras' website says that offenders convicted of PIC fraud will have to pay a penalty of up to four times the amount fraudulently obtained, and face a fine of up to SIN$50,000 and/ or imprisonment for up to five years. This includes anyone who "wilfully assists" another person to get a payout that they are not entitled to.