Court Decision in Herbalife International Singapore Pte Ltd vs Comptroller of Goods and Services Tax on Revenue Collection Leakages

Mr Derrick Goh asked the Deputy Prime Minister and Minister for Finance in view of the Court decision in Herbalife International Singapore Pte Ltd vs Comptroller of Goods and Services Tax in March 2023 (a) how many similar cases concerning revenue collection leakages have been detected in the past; (b) what is the total amount involved in these leakages; (c) how were these cases dealt with; and (d) whether there are any updates to IRAS’ study of the judgment and potential plans to address this gap in the Goods and Services Tax Act 1993.

The issue in the case of Herbalife International Singapore Pte Ltd vs Comptroller of Goods and Services Tax is whether the Goods and Services Tax (GST) should be charged on the discounted or full price of products sold by Herbalife International Singapore Pte Ltd (Herbalife) to its members. The GST Board of Review had earlier ruled in favour of the Comptroller; however, the High Court subsequently ruled in favour of Herbalife upon its appeal for GST to be charged on the discounted price of its products.

The decision by the High Court is specific to the facts of the Herbalife case. Other cases involving direct selling companies have facts and circumstances that differ from the case of Herbalife and are thus not directly comparable.

The Inland Revenue Authority of Singapore (IRAS) will continue to study the various business models and industry arrangements in reviewing whether there are any gaps in the existing GST legislation.