Kian Min Express Transport Pte Ltd, a freight forwarding company, is the first company to be charged for misusing its Major Exporter Scheme (“MES”) status to import goods without paying the Goods & Services Tax (GST). The court ordered the company to pay a fine of $24,000 on 12 charges of failure to comply with the MES’ conditions imposed by the Comptroller of Goods & Services Tax.

The Major Exporter Scheme (MES)

GST is payable on the importation of goods. MES is a scheme that allows GST-registered businesses to import non-dutiable goods without paying GST at the point of importation. This scheme is designed to ease the cash flow of businesses that substantially export the goods they import.

The approved MES business must comply with the following conditions:

1. Import only his own goods into Singapore;
2. Should not in any circumstances import goods into Singapore on behalf of an unauthorised third party; and
3. Must have control over the custody and possession of the goods imported into Singapore.

Failure to comply with MES conditions

Kian Min Express used its MES status to enable two freight forwarders, Soon Brother’s Transport & Shipping Service (“SBT”) and Narita Carrier Logistic (“NCL”), to import goods into Singapore without paying GST from July 2007 to December 2008. The total amount of GST not paid on the goods imported by SBT and NCL was close to $4 million.

SBT and NCL are required to pay GST to Singapore Customs on importation of goods into Singapore. However, Kian Min Express helped SBT and NCL bring their goods into Singapore GST-free by using its MES status when it also did not have control over the custody and possession of those goods imported by SBT and NCL. Kian Min Express’ only role in the importation of the goods was to complete paper declarations of the MES permits to facilitate their import. In return, Kian Min Express charged SBT and NCL a fee for each of the MES permit declarations made on their behalf.

IRAS takes a serious view on abuse of MES

Inland Revenue Authority of Singapore (IRAS) takes a serious view of taxpayers who do not comply with the requirements of the scheme or wilfully abuse the scheme, and will not hesitate to bring the offenders to court.

The abuse of the scheme by offenders who facilitate the import of goods belonging to unauthorised third parties without paying GST can lead to leakage to GST revenue.

Anyone who wishes to report malpractices or potential abuses of the scheme can write to:
Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987
Email: [email protected]

IRAS will ensure that the identities of informants are kept confidential.

Inland Revenue Authority of Singapore