Setting up an Import Export company in Singapore
Singapore is a world-class player in global commerce. Its strategic location in the very center of Southeast Asia, its extensive air and sea links to facilitate inter-regional and global trade have led to its emergence as a major trade hub in the global supply chain. It now ranks as the 14th largest exporter and the 15th largest importer in the world. So if you plan to conduct an import or export business activity, Singapore will be a perfect jurisdiction for incorporating such a venture.
It includes the following topics:
- Why is Singapore a major trading hub?
- Setting up your import or export company in Singapore
- Regulations on import and export of goods from Singapore
- Regulations on import and export of goods transiting through Singapore
- Regulations on import and export of goods NOT transiting through Singapore
- GST and Duty
- Storing Goods
- Financial Considerations
Why is Singapore a major trading hub?
There are several reasons for Singapore’s emergence as a key trading center. These are:
- Favourable geographical location. Singapore straddles the strategic sea route through which an enormous amount of trade (worth nearly $5 trillion each year) flows between the East and West. In fact, nearly 30 percent of all Asian trading is conducted through Singapore.
- Reliable infrastructure. Singapore has one of the best infrastructures among the world’s top cities, according to the Mercer Quality of Living study. This small state is served by a network of 3,122 kilometers (1,940 miles) of highways, 99 percent of which are paved.
- Business-friendly regulations. The country is ranked second in the Ease of Doing Business global rankings. Singapore’s liberal attitude towards the import and export of goods, ease of company setup, and minimal bureaucratic hurdles contribute to this ranking.
- Attractive tax regime. Income tax rates are competitive for both companies (17%) and individuals (the tax rate is capped at 22% and most payers pay a significantly lower rate). To boot, numerous tax relief schemes are available. Singapore has concluded more than 70 avoidance of double taxation agreements, which further simplifies international trade by eliminating double taxation.
- Stable financial system. Singapore’s financial system is tightly integrated into international financial markets. It has more than 500 world-class financial institutions. The country provides for 25-35% of trade finance for commodities trading in Asia.
- Low corruption. The country has been ranked fourth globally in Transparency International’s anti-corruption index 2019. It is a rule-following country where contracts are respected and enforced. Nepotism is non-existent.
- Skilled manpower. Singapore employs more than 14,000 in its trade and sales sector and this small country of just 5 million has the 4th largest pool of trading talent in the world — after London, New York City and Houston. 47% of the country’s workforce has a higher education degree. Yet, the labour remuneration in the country is relatively low.
These factors have attracted nearly 70% of the world’s largest commodity trading companies (such as Vitol, Wilmar International, Golden Agri-Resources etc.) that generate more than US$1 trillion in annual turnover from their Singapore operations.
Setting up your import or export company in Singapore
In order to start a trading business, you should register your Singapore company first. The company registrar in Singapore is called Accounting and Corporate Regulatory Authority (ACRA) which is the national regulator of business entities in Singapore. The procedure is similar to incorporating any other enterprise — it’s fast and hassle-free. The most suitable form for a trading enterprise is a private limited company. Foreigners are required to work with a Singapore-based corporate services provider, such as our firm CorporateServices.com, to incorporate their company.
Briefly, the requirements for registration of a private limited company are as follows.
- A company may have 1 to 50 shareholders — local or foreign persons, each of whom can be individuals or corporate entities.
- The minimum paid-up capital is just S$1 which can be increased at any time.
- A company must have at least one Singapore-resident director.
- A company must appoint a Singapore-resident company secretary.
- A company is required to have a local registered address.
- The company name must be approved before proceeding with the registration.
Once the company is incorporated, it will receive a Unique Entity Number (UEN), which is a standard and unique identification number for each Singapore entity. All government agencies identify a company by their UEN which makes it very easy for intra-agency communication and integration.
Regulations on import and export of goods from Singapore
Once your venture is registered, and has obtained a UEN, you may commence your trading activities. Note that your company must follow the relevant import or export regulations described below to be in compliance with the laws.
Importing goods into Singapore
Singapore legislation defines importation as bringing goods into the customs territory of the state — except goods that are in transit — by any means, from any place (including a free trade zone) for the importer’s own use or use of some other person.
To carry out the import activities you must obtain the necessary permits by following the steps as described below.
Activate Customs Account
First you should activate the company's Customs Account at the Singapore Customs website, after which you will receive a Customs approval letter. This service is free and usually can be completed within the same working day. Your corporate service provider can take care of these tasks for you.
Apply for Inter-Bank GIRO Account
To pay duties, taxes, fees, and other charges on the services provided by Singapore Customs, you need to register and maintain an Inter-Bank GIRO (IBG) account. Such an account allows you to make payments directly from your bank account to Singapore Customs. The application for the IBG is submitted to the Customs department. Again, your corporate service provider can provide this service for you.
After obtaining the IBG, in certain cases the government requires you as an importer or your declaring agent to provide financial security. Declaring agent is a сompany making an application for a permit, certificate, licence or any other document or form of approval on behalf of an importer (including where an importer is concurrently registered as that DA). Situations when a security is required include import of goods that involve dutiable goods, temporary import of goods for approved purposes, and to operate licensed premises such as licensed warehouses and excise factories. A Banker’s Guarantee, Finance Company Guarantee, or an Insurance Bond may be used for this purpose. The amount of security required for a permit application depends on the type of goods and their trade movement; you can find these details on the Customs website. The Customs may also require security to be furnished for situations not mentioned above, or vary the amount on a case-by-case assessment.
Apply for permits and licenses
You will need a customs permit to import the goods. As an importer, you may register yourself as a declaring agent or appoint a declaring agent to act on your behalf. Permit applications are submitted by the declaring agent online through the TradeNet online system and can be submitted by your corporate service provider.
However, Singapore legislation defines certain goods as controlled goods. These require an additional permit from Competent Authorities (CA) before they may be imported into Singapore. In each case you should apply to the relevant CA. A non-exhaustive list of such goods and relevant CAs appears below.
National Parks Board
Singapore Food Agency
Licensing Division Singapore Police Force
Infocomm Media Development Authority
Health Sciences Authority
National Environment Agency
To be sure, you may search through the Trade Net service using the description of the product and Harmonized System product codes to check if your goods are controlled or prohibited. If the item is subject to control, you may check directly with the respective CAs on their licensing requirements.
Prepare documents for customs clearance
After you’ve obtained the necessary permits, the last step is cargo clearance. The appropriate documents must be submitted at an entry point — the main document is a printed copy of the approved customs permit. Supporting documents may include the invoice, the packing list, and the bill of lading or air waybill.
These documents must be preserved for five years from the date of customs permit approval, in either physical or digital form.
Take note that there are certain categories of goods — such as weapons, nuclear materials, obscene materials, reproductions of copyrighted materials, etc. — that are prohibited and may not be brought into or out of Singapore in any case. See the full list in the Regulation of Imports and Exports Regulations.
Singapore legislation defines export as taking goods out of the customs territory of the state — except trans-shipped goods or goods in transit — by any means, to any place, including a free trade zone.
The procedure for fulfilling export requirements is similar to that for importing goods. You should follow the steps described below.
Activate Customs Account
You must activate your Customs Account at the Singapore Customs website, following which you will receive a Customs approval letter. All of these tasks can be performed by your corporate services provider.
Apply for permits and licenses
Your company must acquire a customs permit to export goods. You may register yourself as a declaring agent or appoint a declaring agent to act on your behalf. The appropriate permit applications are submitted online through the TradeNet system. Again, your corporate service provider can assist you with these tasks.
As in the case for importing, additional permits or licenses from the respective Competent Authorities (CA) are required to export controlled or strategic goods.
a. Controlled Goods
Here are some examples of controlled goods and the relevant Competent Authorities where you may get the necessary permit:
Articles of clothing intended as protection against attack, including bulletproof vests
Commissioner of Police
Helmets intended as protection in military combat
Commissioner of Police
Toy or replica guns
Commissioner of Police
Commissioner of Police
Toy or replica explosives, grenades, ammunitions or improvised explosive devices
Commissioner of Police
To be sure, you may check your goods via TradeNet as well as described for importing.
b. Strategic Goods
This category includes goods and technology that are intended or likely to be used as weapons of mass destruction. If you plan to export Strategic Goods, you will have to apply for a Strategic Goods Control Permit through the TradeNet system. You may find the full list in the Strategic Goods (Control) Order.
Prepare Documents for Customs Clearance
You will have to submit to Customs the export permit, along with the other supporting documents (such as the invoice, the packing list, and the bill of lading or airway bill). You must also provide your permit number.
Take note, that you may acquire a certificate of origin for any exported goods manufactured in Singapore through the TradeNet system; such a certificate may be necessary in your selling destination.
Regulations on import and export of goods transiting through Singapore
Singapore legislation defines transiting as bringing goods into Singapore from a place outside the country for the sole purpose of moving it to another state either by the same or another transport. The term “transhipment” is also used for this concept.
If your trading company will engage in transit of goods through its Singapore operations, it will be considered as a transhipment agent. Accordingly you will be required to account for the movement of your goods while they are being transited through Singapore.
Please follow the following steps to obtain the relevant permits and authorisation from the relevant Competent Authorities.
Activate Customs Account
First your trading company must activate its Customs Account at the Singapore Customs website, after which you will receive a Customs approval letter. This service is free and can usually be completed within the same working day.
Register as Declaring and Transhipment Agent
The next step is to register with customs as a declaring agent for the export or import operations. In addition, your company must be registered as a transhipment agent. Take note that for this purpose your business must originally be registered with ACRA as a shipping agent, air cargo agent or freight forwarder.
After Singapore customs consider your applications for declaring and transhipment agent status, it will provide an email reply to inform that your company is successfully registered as such an agent. Once the registration has been approved, your entity will be able to proceed to the next steps necessary to submit applications for obtaining the main transiting document — the transhipment permit.
Check if Your Goods Are Controlled or Prohibited
Make sure that the goods you intend to tranship do not belong to the category of strategic, controlled, prohibited, or subject to restrictions by Competent Authorities in Singapore. The procedure is the same as described in the exporting and importing sections. If necessary, apply for the relevant permits to the Competent authorities.
For transhipment of dutiable goods such as tobacco, liquor or motor vehicles, you are required to furnish security in the form of a Banker’s Guarantee, Finance Company Guarantee, or Insurance Bond. The procedure is similar to those described above for importing goods. You may also find the security amount and other details on the Singapore Customs page.
Apply for Customs Transhipment Permit
You must apply for the relevant transhipment permit where it is required. For instance, when transhipping goods from one Free Trade Zone (FTZ) to another FTZ, you need a Through Transhipment with Inter-Gateway Movement permit; when transhipping controlled goods within the same FTZ, you must apply for a Through Transhipment within the same FTZ permit; etc. Each permit application typically costs S$2.88. You may find more details here.
Prepare Documents for Cargo Clearance
Finally you are required to present the goods along with a printed copy of the customs permit, and supporting documents such as invoice, packing list, Bill of Lading or Air Waybill to the checkpoint officers at the entry and exit checkpoints.
Regulations on import and export of goods NOT transiting through Singapore
Singapore’s trade and relevant customs legislation covers only issues of import, export, or transit procedures. These cases apply to situations where goods are brought into, out, or through the territory of Singapore. When your Singapore-incorporated company intends to trade abroad, to transit goods through the territories of third states, these cases will be regulated by the legislation of those countries.
Note that in most cases when buying and selling goods abroad on a regular basis, the laws of a country where you operate will require you to register a business. Usually you are to choose between incorporating a subsidiary company, working through a representative office or other legal form provided by the relevant national laws.
When planning to operate your trade business activities abroad, you must make sure you are in line with the national customs, tax, and corporate legislation.
GST and Duty
Singapore duty and the Goods and Services Tax (GST) must be paid for importing dutiable and non-dutiable goods into the state for domestic consumption. The GST is charged at the rate of 7 percent of the cost, insurance, and freight (CIF) value. GST is administered by the Inland Revenue Authority of Singapore (IRAS) and collected by Singapore Customs.
The import duty must be paid on imports of specific types of goods such as liquors, tobacco products, motor vehicles, and petroleum products, the rate being different for each type.
Exporting and Transit
Neither GST nor duty is levied when exporting from or transiting goods through Singapore.
Note, that the most convenient way is to pay duties and GST is through the GIRO system, mentioned above. It authorises Singapore Customs to make direct deductions from your bank account.
Free Trade Zone Warehouses
These premises are located in free trade zones (FTZ) — areas through which companies can import, sell or export goods without customs, excise duties or GST. All goods including dutiable ones can be stored in the FTZs except for liquors and cigarettes. However commodities that arrive by rail and road can not be deposited into FTZs and are subject to duties and taxes.
The Zero-GST Warehouse Scheme (ZGS) allows approved companies to store only non-dutiable goods for an indefinite period of time in a designated area licensed by Singapore Customs, with the GST suspended.
You can warehouse only dutiable goods, namely liquor, tobacco, motor vehicles and petroleum. The non-designated areas of the same warehouse premises may be used to store other goods such as duty-paid goods.
Note that GST and duties payable for the goods are suspended while the goods are in warehouses and until the goods are removed from the premises and brought into the local market for consumption.
Corporate Bank Account in Singapore
Opening a corporate account in a local bank is one of the essential aspects of your Singapore trade venture. This will ensure timely payment, access to world-class banking services for trade, and reliable savings of your funds. Given the large number of commercial banks in Singapore, companies have many options to open an account. CorporateServices.com has created a panel of reliable partner banks — which includes DBS Bank, OCBC Bank, UOB, Standard Chartered, Citibank, HSBC — where you can open an account with ease. Please find the necessary information for opening a corporate bank account here.
Corporate loans are offered by most banks in Singapore. The most common types of business loans are:
- Unsecured Business Term Loan. Lump sum is usually between $50K to $300K. Repayable via equal monthly installments typically between 3 to 5 years.
- SME Micro Loan is a government assisted financing scheme for local SMEs. Maximum funding of $100K is available for companies with annual revenue less than $1M or less than 10 employees.
- SME Working Capital Loan is a government assisted financing scheme from Spring Singapore launched in June 2016. Up to $300K financing for Singapore SMEs is available.
Letter of Credit
In Singapore Letter of Credit (LC) is a common practice. This is a banking service where a buyer’s bank guarantees that a buyer's payment to a seller will be received on time and for the correct amount. In the event when the buyer is unable to make a payment, the bank will be required to cover the full or remaining amount of the purchase. It eliminates the risk of non–payment against delivery for the seller and risk of non-delivery against payment for the buyer.
Global Trader Programme
A very attractive option for your company to decrease its tax burden is the Global Trader Programme. The GTP provides a reduced corporate tax rate of 5% or 10% on qualifying trading income for three or five years. Qualifying trading income includes income from physical trading, brokering of physical trades and derivative trading income.
Trade Credit Insurance Scheme (TCIS)
Trade Credit Insurance (TCI) is an insurance protection that your trade company can purchase to protect itself against non-payment by buyers, enabling you to acquire new customers with greater confidence and reduced default risk. If your company qualifies, the government can support up to 50% of the minimum insurance premium for TCI policies provided commercially by Singapore-registered credit insurers. This is subject to a maximum lifetime support of S$100,000 per company.
Your venture qualifies if:
- Company is registered and physically present in Singapore, i.e. incorporated in Singapore with the ACRA;
- Have a minimum of 30% local shareholding;
- Has maximum group employment of 200 employees or maximum group revenue of S$100M.
Incorporating your venture in Singapore is a very sensible strategy for a trading company. The procedure is transparent, cheap, and clear. When your Singapore-incorporated сompany decides to start importing to or exporting from Singapore any goods for commercial purposes, you are required to apply for permits or licenses from the appropriate Competent Authorities and follow the other procedures described. Obtaining such documents is simple and fast. Besides, your company may enjoy the number of governmental programs supporting trade business. Please contact your CorporateServices.com account executive if you are going to incorporate your Singapore trading venture, need help with obtaining any import or export permits or any other assistance.
Eddy and Hannah
Your Customer Service Team
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