Kian Min Express Transport Pte Ltd, a freight forwarding company in Singapore, 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 S$24,000 (US$19,240) on 12 charges of failure to comply with the MES’ conditions imposed by the Comptroller of Goods & Services Tax.
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.
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 S$4 million (US$3.2 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.