Duty and GST of imported motor vehicles

Date: 18 February 2011

PQ for Written Answer:

Mr Teo Siong Seng asked the Minister for Finance whether his Ministry will consider returning the 20% duty and 7% GST imposed on the import of motor vehicles to motor vehicle traders in cases where the traders find tremendous difficulty in selling these vehicles in Singapore due to the exorbitant COE prices and where they designate them wholly for export.

Reply by Finance Minister Tharman Shanmugaratnam:

1. Mr Teo has asked whether the duty and GST paid for imported cars could be refunded if they cannot be sold locally and a business decision is then made to export the cars.

2. When traders import cars, they can choose to either release the cars directly into the Singapore market, or keep them in Licensed Warehouses first. The Licensed Warehouse scheme is designed specifically to help traders that import motor vehicles for re-export, or for which they have yet to find buyers for the cars. Duty and GST are suspended for cars stored in Licensed Warehouses. All traders can apply to be Licensed Warehouse operators, or choose to store their vehicles at third-party Licensed Warehouses.

3. Import GST and duty are payable at the point of direct release of the imported car into the domestic market, or at the point at which it is removed from a Licensed Warehouse. GST-registered traders can recover this import GST in their periodic GST returns to IRAS, without having to wait for the cars to be sold.

4. As for customs duty, traders can use the Licensed Warehouse scheme to manage their business risk by deferring duty payment until buyers have been found for their cars. It is up to the trader to decide whether and when to release the cars into the domestic market. As this is a commercial decision and there are already schemes in place to help motor vehicle traders manage their business risks, there is no basis for the Government to provide refunds for duty of cars that they eventually decide not to sell locally.