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Singapore is one of the best countries to start a business. Its strategically-placed geographic location earned it the title of ‘port of call’ for traders across the world.
With 23 implemented FTAs (Free Trade Agreement) and 200 shipping lines that connect to 600 ports in 120 countries, Singapore is the first choice for anyone to start a trading company in Asia. More than 6,500 weekly flights take off from its Changi International Airport, connected to 300 cities in 70 countries.
If you intend to set up your Singapore trading company, this guide will give you a head start. You will learn the perks of incorporating a Singapore trading company. You will understand the entire registration procedure with the required licenses and permits for your Singapore trading company.
Singapore is home to more than 3,000 logistics and supply chain management companies, both international and local. The benefits of registering a Singapore trading company are as follow:
Three different Singapore trading company models can be set up in Singapore.
The first and second models are almost similar, because goods cross the Singapore borders in both the cases. However model C differs as the goods are not crossing Singapore border.
This guide aims to provide you the required knowledge to understand these models and register your Singapore trading company.
Singapore trading company incorporation takes place in a number of steps. You must follow all these steps to register and run your Singapore trading business successfully.
Incorporating a Singapore trading company is similar to incorporating any other company in Singapore. A Private Limited Company is deemed best for a trading business.
You must fulfill all the requirements of ACRA for successful business registration. ACRA (Accounting & Corporate Regulatory Authority) is the national registrar to register any business in Singapore.
A UEN (Unique Entity Number) is issued to all the successfully registered companies in Singapore. It must be mentioned in all the applications made to authorities in Singapore.
All the Singapore-incorporated companies must register under the Companies Act of Singapore and follow all its compliances. We have detailed guides on the topic of Registering the company in Singapore.
All the trading companies in Singapore must register with Singapore Customs. You can register your company as an importer, exporter, common carrier, or any other type depending on your business activities.
Any business entity with a valid UEN can activate their Singapore Customs Account for free. Generally, it is done in less than two days. Customs Office issues a letter of approval that is valid until your Singapore trading company is not struck off or wound up.
This step is necessary especially if you are into the business of importing or exporting goods into / out of Singapore. More specifically when goods are going to cross the Singapore border. (model A & B). In case of model C, this step is not necessary.
Registering with customers, and getting central number will enable your company, to process incoming and outgoing shipments with tradenet.
For the import and export of goods, every Singapore trading company needs Customs permits. An application to obtain Customs permit in Singapore is made through TradeNet. It is an online platform that enables integration of documentation processing procedures of import, export, and transshipment. It facilitates the fulfillment of trading formalities of trade and logistics communities. An IN Permit is required for importing goods in Singapore. Similarly, an OUT Permit is required for exporting goods outside Singapore.
There are rules and regulations for both importers and exporters of controlled and non-controlled goods.
It is essential for every Singapore trading company to maintain an IBG (Inter-Bank Giro) arrangement. It enables the Singapore Customs to deduct payment of duties, GST, and other Customs fees directly from your bank account. The bank takes 3 to 4 weeks to approve your Giro account application.
So the way it essentially works is, on every incoming shipment when the value is declared, tradenet system will automatically compute the duties etc applicable, and then that amount is automatically deducted from your bank account.
While most of the goods can be imported into Singapore there can be few products which may require clearance from government authorities. Example of such products are food products, controlled drugs, alcohol and so on. So in this case in addition to above procedures, your trading entity in Singapore will also need to comply with the requirement regarding import and storage of these goods. Depending on the nature of goods, different government authorities will get involved in the approval procedure.
Networked Trade Platform (NTP) was officially launched in 2018 and was created by Singapore Customs and GovTech. It is an online platform that enables trade and logistics communities to connect and conduct business worldwide.
It was introduced as an upgraded replacement to TradeNet and TradeXchange.
It enables any Singapore trading company to enjoy a wide variety of trade-related VAS (Value Added Services), namely:
Do note that TradeNet and TradeXchange services have been migrated to the NTP’s official website already. The current URL to access TradeNet services (like applying for IN and OUT permits) is:https://www.ntp.gov.sg/public/government-services
Free Trade Zones in Singapore are designated areas where duty and GST are suspended on the imported goods. The temporary suspension of GST and duty is only applicable to the transshipment of goods, i.e., when the goods are meant to be re-exported from Singapore.
You will have to pay duty and GST if:
A Singapore trading company can enjoy the benefits of nine Free Trade Zones in Singapore:
Licensed and zero-GST warehouses are used to store goods to temporary suspend the duties and GST. These warehouses are typically located in the FTZ area.
|Dutiable goods can be stored here to temporarily suspend the duty and GST|
|Non-dutiable goods can be stored here to temporary suspend the GST|
As longs as the goods remain on the said premises, there is no need to pay any duty or GST. However, duties and GST are payable once the goods are removed from the warehouse and brought into the market for consumption.
If you are operating model C, where goods do not enter into Singapore then its not an issue at all, as there are no specific activities to be carried out in Singapore. However in case of other two models there are few activities those needs to be carried out. The brief list can be ;
Foreign promoters often have a problem, they are often located in overseas locations, and they don’t have any employee or person to do all these tasks. The number of shipments tend to be low on a monthly basis, which does not justify appointment of a full time employee.
In this case they can engage a logistic service provider to carry and manage all above activities on their behalf. For this you can refer to the Singapore Logistics Association members directory and look for a suitable service provider.
A member company will provide you all the services for storing of goods, clearance of goods and also for necessary paperwork.
Majority of the products are not subject to import duty in Singapore. We will say 99% of the products are exempted from import Customs duty. However, there are certain classes of goods, which are regulated and on which you need to pay, customs duty for import.
The formula for amount charges can be based on Specific % of value or weight. Currently, the products that come under this category are as follows;
In all the cases, when you import goods into Singapore, you will be required to pay 7% GST on import. This is applicable to all the products, and there are no exemptions. If the products are being imported for personal consumption, then import upto 400 SGD per package are free of GST. However, if you are importing as a commercial entity (Essentially as trading or import/export entity) then this 7% GST will not get any exemption irrespective of the value per package.
Both importers and exporters must follow specific Singapore Customs guidelines and other CAs to conduct their trading activities. These guidelines are specific to both importers and exporters.
Let’s take a look at them.
A Singapore trading company must declare to Singapore Customs before importing goods. Import in Singapore refers to:
There are dutiable and non-dutiable goods.
For non-dutiable goods, you do not pay any duty. However, you must pay 7% GST (Goods & Service Tax) on non-dutiable goods.
|Value of Import||S$10,000|
|Total Value with Import Duty||S$10,000|
|Total value with 7% GST||S$10,700|
The above example illustrates how you will pay a 7% GST on imported non-dutiable goods.
In the case of dutiable goods, you will have to pay both import duty and GST. Hence, GST is mandatory for all imports.
In case of controlled goods or goods restricted by CAs (Controlled Authorities), you will require an additional permit from the respective CAs.
Some examples of controlled goods are:
Goods that you are going to export also require a declaration to Singapore Customs before export. The following acts regulate the goods exported from Singapore:
To apply for an export permit, a Singapore trading company must also declare the FOB (Free on Board) value of the goods.
You need an export permit in the following scenarios:
A CO, short for Certificates of Origin, is sometimes required by buyers to attest to the origin of your goods.
Two types of COs can be claimed:
An ordinary Certificate of Origin can be issued by Singapore Customs, Singapore Manufacturing Federation, Singapore Chinese Chamber of Commerce, or any other authorized bodies.
An ordinary Certificate of Origin is issued to:
It is essential that at least 55% value of the goods must be created in Singapore before re-export, to claim the certificate of origin. Otherwise, you cannot claim a Certificates of Origin as per Singapore laws. Simply, repackaging goods from China or other countries will not qualify them for a Certificate of Origin.
Only Singapore Customs can issue a preferential Certificate of Origin. If you claim a preferential Certificate of Origin for your goods, your buyers will pay less or no customs duty on the goods imported under Schemes of Preferences or Free Trade Agreement.
To become eligible for a preferential Certificate of Origin, a Singapore trading company must import goods into Singapore and meet the Customs’ requirements for a preferential Certificate of Origin.
The procedure to obtain any type of Certificate of Origin is not much complicated.
Officers from the ICA (Immigration and Checkpoint Authority) examine people, vehicles, and cargo entering or leaving the country. The clearance procedure for import/export depends on cargo and the mode of transport.
There are two cargo types:
The clearance procedures for both cargo types are different.
A Singapore trading company must produce an IN Permit from the Customs with the relevant documents, like loading bill, invoice, packing list, etc.). At an entry checkpoint, these documents must be presented before ICA officers for the clearance of goods.
There is no requirement to produce the printed copy of Singapore Customs permit and other relevant documents to ICA officers at entry checkpoints if the containerized cargo is imported by sea. However, a Singapore trading company is required to produce the Customs Permit and documents like invoice, packing list, and bill when you import the containerized cargo by land or air.
For a permit application, shipper seal number and container number are required.
First, you must understand that a Singapore trading company can import two types of containerized cargo.
FCL containers are sealed at FTZ Out-gates for Customs examination and are not unstuffed in the FTZ. Consignees or their transport agents can make arrangements with Customs for supervision when the containers are unstuffed. Customs seal is generally placed during import and should not be broken. Customs seal can only be broken under Customs supervision or with written permission.
Some containers do not require Customs examination, and ICA officers release them without a seal. They give SNR facilitation to such containers. SNR is short for Sealing Not Required. These containers do not require Singapore Customs supervision when they are unstuffed.
LCL containers do not require Customs supervision when they are unstuffed. Generally, these containers are unstuffed in the FTZ and are cleared as conventional cargo through the Out-gates of FTZ.
Do note that an ICDV (Import Certificate and Delivery Verification) Permit is required to import high-technology goods.
Again, ICA is responsible for conducting checks on the exported goods. An OUT Permit is required with any other relevant document from the Controlling Authority.
Some of the uncontrolled imported and exported items enjoy an exemption of about $400 on CIF (cost, insurance, freight) under special circumstances.
Trading, like any other business, involves financial risks. Therefore, a Singapore trading company often resorts to insurance, loans, or a letter of credit as a safety measure to cover the financial risks.
An LC (Letter of Credit) is the preferred payment method between buyers and sellers. The buyer’s bank issues an LC to the seller. It guarantees the payment to the exporter from the buyer’s bank.
An LC eliminates two risks:
Most banks in Singapore provide trade finance services. They provide loans and bank guarantees to assist traders.
The following trade financing options are offered by them:
IE (International Enterprise) Singapore launched a Global Company Partnership Programme. TCIS (Trade Credit Insurance Scheme) is a financial assistance Programme under the GCP.
IE provides insurance against non-payment or default on payments by buyers under TCIS. IE also offers premium support, up to 50% of the minimum premium, to the qualifying companies.
While most of the Singapore banks will offer financing for trading purposes for companies promoted by local entrepreneurs. However, financing will not be available for those companies where shareholding is with foreign promoters. The typical rule is, to avail unsecured credit, your company must have mnimium 30% shareholding with the local person. Please note, a back to back LC is considered as unsecured credit for banking purpose.