Various merchants worldwide use Singapore as a ‘port of entry,’ particularly those operating in the western and eastern time zones.
Singapore is the globe’s 14th leading exporter, as per the World Trade Organization‘s recent statistics. An outline of the main facets of trading is presented below if you wish to register a company in Singapore for the import/export business.
Trade has become a vital element of Singapore’s developing economy, with 3000 logistics and supply chain management enterprises available. In addition, Singapore offers shippers a choice of 200 shipping lines with connections to over 600 ports in over 120 countries.
Singapore has well-defined procedures in place due to its market dominance in the import/export trade industry. That is why this article is of great importance as it will help you to learn more about the processes you will have to go through if you intend to establish a trading company in Singapore.
Why Does Singapore Offer An Ideal Hub For Setting Up An Import/Export Trading Company?
- The majority (60-80%) of the world’s largest commodity trading corporations are based in Singapore, with annual sales exceeding US$1.2 trillion. Notably, moreover, 30% of the 400 trading firms based in Singapore employ one or more C-level executives.
- Singapore offers 25-35% of trade finance for commodities trading in Asia as a global financial centre with over 500 financial institutions.
- Furthermore, the Singapore Exchange is Asia’s most internationalized exchange, as well as the world’s third-largest foreign exchange market and largest offshore RMB hub (outside of Greater China).
- There’s also TradeNet, which brings together more than 35 border agencies and is the world’s first national single window for commerce. The city-state ranks first in the World Economic Forum’s Enabling Trade Index for its nationwide Electronic Data Interchange (EDI).
- Singapore accounts for 30% of all Asian trade, and the Strait of Malacca is the world’s second-largest commercial route for crude/petroleum transit.
- The World Bank’s Logistics Performance Index 2018 ranks Singapore seventh in the world and second in Asia.
- It also has Asia’s best seaport, which has the highest concentration of oil storage in Asia in addition to being the world’s largest bunkering port. Singapore’s container ports are the busiest in the world, and Changi International Airport has more than 7.400 weekly flights to 300 locations in 60 countries.
- After London, New York City, and Houston, the country employs 350,000 individuals in the wholesale trading sector and boasts the world’s fourth-largest pool of trading talent.
- In Singapore, tertiary education is held by 58.9% of the workforce.
- In Transparency International’s anti-corruption index 2020, the country was placed first in Asia and third overall.
- In 2020, the Singapore International Arbitration Centre will handle over 1,080 cases, making it Asia’s top arbitration centre.
- The World Bank has ranked Singapore the world’s easiest location to do business for the eighth year in a row.
- Companies (17%) and individuals (17%) pay competitive income tax rates (maximum tax rate of 22%).
- Over 88 comprehensive avoidance of double taxation agreements exist in Singapore.
What Are The Steps To Starting A Trading Firm (Import And Export) In Singapore?
Once you’ve decided to establish a trading company in Singapore to help you take advantage of all of the benefits listed above, you need to follow the following steps to get the ball rolling:
This method is comparable to forming any other business in Singapore. While there are five different forms to choose from, the private limited company is the most frequent and versatile business structure that may be established in Singapore.
The Accounting & Corporate Regulatory Authority of Singapore (ACRA), which is the country’s national regulator of businesses and public accountants, requires that all businesses operating in the country register under the Singapore Companies Act and follow its rules and regulations through the BizFile+ incorporation website.
Select the trading business activities your organization will engage in using the Singapore Standard Industrial Classification Code (SSIC). At the time of company formation, all primary and subsidiary business operations must be properly declared. While our detailed company incorporation guide is available, the following are the key requirements for forming a company in Singapore:
- A minimum of one shareholder (individual or corporate entity)
- There is one resident director (maybe a citizen, permanent resident, EP holder or Dependent Pass holder)
- Initial paid-up share capital of at least S$1
one company secretary who is a resident of Singapore
- A physical office address in Singapore.
An Exempt Private Company (EPC) is one with 20 or fewer shareholders and no corporation holding any beneficial interest in the company’s shares. A private corporation is one with more than 20 but fewer than 50 stockholders. It becomes a public business when the number of shareholders reaches 50.
When the company’s incorporation is completed successfully, ACRA sends an email confirming the company’s incorporation. The company’s Unique Entity Number (UEN), which is a standard identification number granted by the Singapore government to any business entity established in Singapore, is included.
Create An Account With Singapore Customs
The next stage for a trading corporation is to register with Singapore Customs.
Any entity that conducts business in Singapore that engages in export, import, or trans-shipment transactions must register with Singapore Customs as an importer, exporter, common carrier, or other.
Every application for permission, license, certificate, or other documents under the Regulation of Imports and Exports Act must include the company’s UEN (Chapter 272A)
All entities with a valid Unique Entity Number (UEN) can activate their Customs Account for free through the Customs Account portal, and this usually happens the same day.
Submit An Application For Customs Permits
You can appoint a declaring agent to apply for Customs permits (export, import, or both) on your behalf after activating your Customs Account. Permit applications can be submitted using either the TradeNet front-end solution or the Government Front-End Application, which can be acquired from certified solution providers.
The average cost of a permit application is S$2.88. The appropriate supporting documentation relating to the purchase, import, sale, or export of the products must generally be kept for 5 years from the date of the Customs permission approval.
For Importers In Particular
Importing Products Is Subject To Duties And GST
You must make a declaration to Singapore Customs if you intend to import items into the country. Furthermore, while non-dutiable items are subject to the Goods and Services Tax (GST), dutiable goods are subject to both GST and duty if they are imported for domestic consumption.
Keep in mind that in Singapore, “an import refers to products carried into customs territory from an entry point or a free trade zone (FTZ) for storage and pending re-export, or foreign goods brought into a free trade zone for storage and pending re-export.”
Also, check to see if the commodities you want to import are controlled or restricted by Singapore’s Competent Authorities (CAs). You can use the product description, the Harmonized System (HS) code or the CA product code to find what you’re looking for.
The name of the CA will be included next to the HS code if the item is subject to control. You can inquire about the license requirements directly with the respective CAs. You can ask for an official classification judgement for a cost of S$75 per product if you need assistance with the product’s entire 8-digit HS code.
In conclusion, unless your goods remain within an FTZ, duty and/or GST payment should be made when they enter Singapore. Also, duty and/or GST will be suspended when goods are transported from an FTZ or entry point into Customs licensed premises (such as zero-GST warehouses or licensed warehouses) as long as the items are stored in the licensed premises.
Furthermore, duty and/or GST are not payable on products that have been awarded duty exemption or GST relief, or on commodities imported under Singapore Customs’ Temporary Import Scheme or the corresponding Inland Revenue Authority of Singapore (IRAS) schemes, such as:
- Major Exporter Scheme (MES)
- Approved Import GST Suspension Scheme (AISS)
- Import GST Deferment Scheme (IGDS)
For Exporters In Particular
You must declare your items to Singapore Customs if you intend to export them. It’s worth noting that items exported from Singapore are exempt from GST and VAT.
Furthermore, the applicable Competent Authorities regulate products exported from Singapore under the Customs Act, the Regulation of Imports and Exports Act, the Strategic Goods (Control) Act, and other legislation (CAs).
Check if the products you plan to export are controlled goods subject to restrictions by Competent Authorities (CAs) in Singapore, similar to the procedure for importing.
The Free on Board (FOB) value of the products must be declared in the export licence application in Singapore. In conclusion, a customs export permit is required for the following items:
- Locally manufactured or GST-paid items are exported.
- Goods exported from the Free Trade Zone (FTZ)
- Dutiable products are exported from a permitted warehouse.
- Non-dutiable products and goods under the Major Exporter Scheme can be exported from a zero-GST warehouse.
- Goods imported under the Temporary Import Scheme can be re-exported.
- Temporary export of goods with the intention of re-importing them
Note that the export of products restricted by the Strategic Goods (Control) Act requires a strategic goods export licence.
Obtain A Certificates Of Origin (CO)
If you’re an exporter, you need also to be aware of the Certificates of Origin clause. A Certificate of Origin (CO) is a document that attests to the origin of a product. Ordinary COs (also known as non-preferential COs) and preferential COs are the two types of COs.
Ordinary COs are issued by Singapore Customs or authorized organizations such as the Singapore Chinese Chamber of Commerce and Industry and the Singapore Manufacturing Federation.
Ordinary COs are issued by these authorised organizations for locally made or processed goods, as well as items from foreign countries that are re-exported from Singapore. They do not, however, issue ordinary COs for the export of textiles and textile articles from Singapore to the United States of America.
When you export your goods under a Free Trade Agreement or a Scheme of Preferences, a preferred CO lets your buyer pay lesser or no customs duty. Singapore Customs is the only one who can issue these.
Singapore Customs also issues back-to-back preferential COs for the re-export of goods based on the preferential CO issued by the initial exporting party. For it to be issued, the products must be brought into Singapore and meet the requirements.
After determining the applicable origin criterion(a) for the good under the Agreement, an exporter can utilize the FTA Cost Statement Calculator to make a preliminary assessment of the qualifying value content and/or Change in Tariff Classification status of the manufactured good under the Agreement.
In conclusion, the technique for obtaining COs is as follows:
- You must register your manufacturing facility.
- Submit a cost-of-manufacturing statement.
- Use Trade Net to apply for a Certificate Of Origin.
- Obtain the Certificate Of Origin
Submitting An Inter-Bank GIRO Application
Another key point to remember is that you must have an Inter-Bank GIRO (IBG) account with Singapore Customs to make it easier to pay customs, GST, and other fees directly to Customs.
The bank normally approves the application in 3 to 4 weeks. You will be notified by fax or email once it has been accepted, based on the contact information you supplied in your Customs Account. You can submit your application by filling out the Application for Inter-Bank GIRO form.
Singapore Customs’ Security Lodgement Requirement
Note that if a trading firm in Singapore engages in – transactions involving dutiable commodities, temporary import of goods for allowed purposes, or operation of licensed facilities such as licensed warehouses and excise factories, it is needed to provide security.
Singapore Customs has the authority to change the security lodgement amount on a case-by-case basis, which could be for regulatory compliance or revenue protection reasons.
Clearance Of Goods Procedure
Validity periods are assigned to approved permits. You should check the validity of the permit for goods clearance that has been presented. When applying for a permit for containerized cargo imports/exports, the container number and shipper seal number are necessary.
The printed copy of the customs permit and supporting paperwork are not required to be presented to the checkpoint officers at the entry points for containerized goods imports by sea.
However, you must present the permit, as well as supporting documentation such as an invoice, packing list, and Bill of Lading/Air Waybill, to the checkpoint authorities for verification when importing containerized cargo by air or land.
If it is mentioned in the permit conditions or if the cargo is dutiable or regulated, please present the cargo to the checkpoint officers with the authorized Customs export permission and accompanying documents such as invoice, packing list, Bill of Lading/Airway Bill. For verification purposes, please carry the permit number with you when you drop off your cargo.
Partially cleared items departing Singapore via the Woodlands and Tuas checkpoints are not permitted. Each container or vehicle of freight should have its permit application.
Obtain A Letter Of Credit
Almost every trader in Singapore uses a Letter of Credit (LC), which eliminates the risk of non-payment against delivery for the supplier and non-delivery against payment for the buyer. It is a letter of assurance from the buyer’s bank to pay an exporter for goods on behalf of the buyer through the exporter’s bank.
Participate In The Global Trader Program
Another plan is the Global Trader Programme, which provides well-established international trading enterprises committed to extending their activities in Singapore a reduced corporate tax rate of 5% or 10% on qualifying trade income for three or five years.
Only enterprises that engage in considerable international physical trade, invest significant directly traceable local business spending, and employ skilled trading specialists in Singapore are eligible for the GTP.
Participate In The Trade Facilitation Scheme
IE Singapore engages in a risk-sharing agreement with the Asian Development Bank (ADB) and Swiss Re Corporate Solutions under this program to improve the capacity for credit guarantees to Singapore-based banks for protection against non-payment risks posed by overseas issuing banks.
As a result, the scheme aims to help Singapore-based enterprises in emerging markets bridge trade financing gaps.
Participate In The Trade Credit Insurance Scheme (TCIS)
TCIS is a financial aid program run by IE Singapore as part of its Global Company Partnership (GCP) initiative. It’s a mechanism that allows businesses to secure their cash flow from non-payment by customers, allowing them to confidently acquire new clients.
TCI can also be used by businesses to provide more reassurance to their lenders, allowing them to get more trade financing and working capital loans. The scheme provides premium support for TCI policies to qualifying Singapore enterprises.
For TCI policies held with Singapore-registered credit insurers, International Enterprise (IE) Singapore will cover up to 50% of the minimum premium. A maximum of S$100,000 is available per eligible Singapore-based enterprise. To be eligible, the business must:
- Singapore is home to the company’s global headquarters.
- The applicant company’s and subsidiaries’ combined revenue must not exceed S$100 million.
- A minimum paid-up capital of S$50,000 is required.
- At least three management staff members must be Singaporeans or Permanent Residents.
While the above stages may appear straightforward, they entail a significant amount of effort and communication with a variety of federal departments. Any hiccup can cause substantial delays in the implementation of your desired project.
So why not make HeySara your go-to company compliance provider to guide you through the process? From the first to the last step, we will be there for you. You may also count on us to take care of the legal obligations once your company is up and running.