Singapore originally developed as a major seaport and is now known as one of the world's largest ports for trade between the West and the East. In this regard, Singapore is one of the most important platforms for traders specializing in trade between Asia, America and Europe.
According to the WTO, Singapore is the world's 14th largest exporter of goods, with more than 3,000 local and international logistics and shipping companies, over 200 shipping lines connected to 600 ports in more than 120 countries.
The port is equipped with the latest technology and a specialized container terminal moves and unloads containers in the shortest possible time thanks to its unique technology and highly qualified personnel. Changi Airport's Air Freight Centre is open 24 hours a day and provides all necessary infrastructure and services to airlines, shippers, freight agents and consignees, allowing them to process cargo quickly and efficiently. Given Singapore's strong performance in exports/imports, there are clear procedures for conducting international trade. In other words, Singapore is a great place to start your trading business.
In our guide, we will cover such aspects of trading in Singapore as: opening a customs account, obtaining licenses and permits, permitted types of goods, import/export of different types of goods (controlled, high-tech, local, etc.), associated taxes and charges, options for financing trade transactions, customs clearance procedures, storage and clearance of goods, etc. This is a brief overview of the topic. For more detailed information you can contact our specialists.
HOW TO ESTABLISH A TRADING COMPANY IN SINGAPORE
STEP 1: COMPANY REGISTRATION
To start trading activities, first of all you need to register a legal entity in Singapore.
STEP 2: REGISTRATION WITH SINGAPORE CUSTOMS
All trading companies are required to register an account with Singapore Customs prior to commencing export and import activities in Singapore. Activation of the account usually takes 1-2 working days after submission of the application. If approved by Singapore Customs, you will be notified by mail. This approval will be valid for the life of your company.
STEP 3: OBTAINING LICENSES AND PERMITS
Import all goods
For the import of all goods, without exception, you must obtain IN approval through the TradeNet® system before the goods can be imported into Singapore.
For the export of all goods from Singapore without exception, you must obtain OUT permission through the TradeNet® system before the goods are shipped out of Singapore.
If the goods are controlled or transported by rail or road, the permit must be obtained before the goods are exported from Singapore.
If your goods are not classified as controlled goods, or are being transported by sea or air, clearance can be obtained within 3 days of exportation,
If the goods were previously imported into Singapore under the Temporary Export Scheme, approval will be obtained prior to the export of the goods.
In certain cases such as import/export of non-customs-controlled sales samples up to a total value of SGD 400 (USD 320) including all charges (costs, insurance and freight), goods may be imported/exported without clearance.
Import/export of controlled goods
Goods subject to customs control are called controlled goods. For their import/export, in addition to the IN and OUT Permits, you will need a permit from the specialized controlling authorities. You can apply for a permit from the specialized authorities through the Tradnet® system or through your freight forwarder/cargo agent. Examples of controlled goods are cigarettes and tobacco products, medicines, animals and foodstuffs.
Imports of high technology goods
Certain types of high-tech goods are subject to export controls by the exporting country and may request the Singapore importer to provide an Import Certificate and Confirmation of Delivery (ICDV). To obtain an ICDV certificate, the importer may apply to Singapore Customs. Goods transported under the ICDV must be imported into Singapore directly from the supplying country without visiting any other countries.
According to the WTO, Singapore is the world's 14th largest exporter of goods, with more than 3,000 local and international logistics and shipping companies, over 200 shipping lines connected to 600 ports in more than 120 countries.
The port is equipped with the latest technology and a specialized container terminal moves and unloads containers in the shortest possible time thanks to its unique technology and highly qualified personnel. Changi Airport's Air Freight Centre is open 24 hours a day and provides all necessary infrastructure and services to airlines, shippers, freight agents and consignees, allowing them to process cargo quickly and efficiently. Given Singapore's strong performance in exports/imports, there are clear procedures for conducting international trade. In other words, Singapore is a great place to start your trading business.
In our guide, we will cover such aspects of trading in Singapore as: opening a customs account, obtaining licenses and permits, permitted types of goods, import/export of different types of goods (controlled, high-tech, local, etc.), associated taxes and charges, options for financing trade transactions, customs clearance procedures, storage and clearance of goods, etc. This is a brief overview of the topic. For more detailed information you can contact our specialists.
HOW TO ESTABLISH A TRADING COMPANY IN SINGAPORE
STEP 1: COMPANY REGISTRATION
To start trading activities, first of all you need to register a legal entity in Singapore.
STEP 2: REGISTRATION WITH SINGAPORE CUSTOMS
All trading companies are required to register an account with Singapore Customs prior to commencing export and import activities in Singapore. Activation of the account usually takes 1-2 working days after submission of the application. If approved by Singapore Customs, you will be notified by mail. This approval will be valid for the life of your company.
STEP 3: OBTAINING LICENSES AND PERMITS
Import all goods
For the import of all goods, without exception, you must obtain IN approval through the TradeNet® system before the goods can be imported into Singapore.
For the export of all goods from Singapore without exception, you must obtain OUT permission through the TradeNet® system before the goods are shipped out of Singapore.
If the goods are controlled or transported by rail or road, the permit must be obtained before the goods are exported from Singapore.
If your goods are not classified as controlled goods, or are being transported by sea or air, clearance can be obtained within 3 days of exportation,
If the goods were previously imported into Singapore under the Temporary Export Scheme, approval will be obtained prior to the export of the goods.
In certain cases such as import/export of non-customs-controlled sales samples up to a total value of SGD 400 (USD 320) including all charges (costs, insurance and freight), goods may be imported/exported without clearance.
Import/export of controlled goods
Goods subject to customs control are called controlled goods. For their import/export, in addition to the IN and OUT Permits, you will need a permit from the specialized controlling authorities. You can apply for a permit from the specialized authorities through the Tradnet® system or through your freight forwarder/cargo agent. Examples of controlled goods are cigarettes and tobacco products, medicines, animals and foodstuffs.
Imports of high technology goods
Certain types of high-tech goods are subject to export controls by the exporting country and may request the Singapore importer to provide an Import Certificate and Confirmation of Delivery (ICDV). To obtain an ICDV certificate, the importer may apply to Singapore Customs. Goods transported under the ICDV must be imported into Singapore directly from the supplying country without visiting any other countries.
For export, transshipment, or transit of strategic goods
Strategic goods in Singapore are regulated under the Strategic Goods Control Act. This includes all types of goods and technology that are intended or could be used for weapons of mass destruction. If you intend to export, transship or bring for temporary transit in Singapore strategic goods, you need to obtain a special Strategic Goods Control (SGC) permit from TradeNet.
To export local goods.
Some buyers may ask the Singapore Exporter for a Certificate of Origin (CO), which confirms that your goods have been produced in Singapore. Certificates of Origin can be of two types:
Ordinary CO - serve to confirm to your buyers that the goods you are exporting were wholly manufactured or manufactured in Singapore.
TAXES & COSTS
Customs and Excise duties
Certain goods manufactured or imported into Singapore are subject to customs and/or excise duties. Taxable goods include: alcoholic beverages, tobacco products, motor vehicles and petroleum products. Taxes are levied on an ad valorem or flat rate basis. Ad valorem rate is calculated as a percentage of the customs value of imported goods.
The flat rate is 300 SGD (240 USD) per kg for a certain weight or other amount of goods. Under some customs programs, no taxes may be levied temporarily until the goods are consumed.
Note that tax exemption is available for certain categories of qualifying goods. For example, wine for use at wine fairs and other events falling under the MICE category (conferences, official meetings, exhibitions, trainings, etc.) is exempt from duties.
Another interesting example is that motorized bicycles not registered as motorcycles or scooters are exempt from excise taxes. This exemption is available under the "BE in Singapore" program of the Tourism Board of the Republic of Singapore.
Goods and Services Tax (GST)
Goods imported into Singapore for domestic consumption are subject to Goods and Services Tax (GST). The GST is administered by the Internal Revenue Authority of Singapore (IRAS) and is collected by Singapore Customs. GST on all categories of goods (taxable and non-taxable) is calculated at an ad valorem rate of 7% of the value of goods.
Taxable base for calculation of GST is taken from CIF (Cost, Insurance, freight) plus the cost of all duties and other expenses, even not reflected in the invoice. In some customs programs GST can be temporarily not charged (up to the moment of consumption of goods). Please note that wine for use at wine fairs, as well as other events belonging to the MICE category (conferences, official meetings, exhibitions, trainings, etc.) are exempt from GST. This exemption is part of the BE in Singapore program developed by the Tourism Board of the Republic of Singapore.
If you work in an area where GST applies, we recommend that you register with the Internal Revenue Authority of Singapore (IRAS) to collect GST. In this case, you will be able to invoice your clients with GST, as well as get a refund of GST paid on imported goods, if the goods have been subsequently exported out of the country.
Please note that Singapore has special programs for big players:
The Large Exporter Program is designed to facilitate the cash flow of large exporters
The GST deferral program for imports is designed to facilitate the cash flow of taxable traders. Allows you to defer payment of GST until the final point of importation.
Singapore Customs Fees.
The most efficient way to pay customs fees, charges, duties and GST in Singapore is a GIRO transfer to Customs directly from your bank account.
Trade Finance and Insurance
Singaporean companies often resort to bank loans, letters of credit, and transaction insurance to cover the financial risks associated with trade.
Letter of Credit
A Letter of Credit is a common practice in Singapore where payment to the exporter is guaranteed by the buyer's bank. This payment option is convenient for both exporters and buyers. The exporter is assured of payment before the goods are shipped and the buyer does not need to make any payments until the goods are received.
Strategic goods in Singapore are regulated under the Strategic Goods Control Act. This includes all types of goods and technology that are intended or could be used for weapons of mass destruction. If you intend to export, transship or bring for temporary transit in Singapore strategic goods, you need to obtain a special Strategic Goods Control (SGC) permit from TradeNet.
To export local goods.
Some buyers may ask the Singapore Exporter for a Certificate of Origin (CO), which confirms that your goods have been produced in Singapore. Certificates of Origin can be of two types:
Ordinary CO - serve to confirm to your buyers that the goods you are exporting were wholly manufactured or manufactured in Singapore.
- Preferential COs - A document that can help improve the competitiveness of your goods if they fall under various Priority Program Agreements or the Free Trade Agreement between your countries.
- You can apply for a CO through Tradnet® or through your freight forwarder or agent.
TAXES & COSTS
Customs and Excise duties
Certain goods manufactured or imported into Singapore are subject to customs and/or excise duties. Taxable goods include: alcoholic beverages, tobacco products, motor vehicles and petroleum products. Taxes are levied on an ad valorem or flat rate basis. Ad valorem rate is calculated as a percentage of the customs value of imported goods.
The flat rate is 300 SGD (240 USD) per kg for a certain weight or other amount of goods. Under some customs programs, no taxes may be levied temporarily until the goods are consumed.
Note that tax exemption is available for certain categories of qualifying goods. For example, wine for use at wine fairs and other events falling under the MICE category (conferences, official meetings, exhibitions, trainings, etc.) is exempt from duties.
Another interesting example is that motorized bicycles not registered as motorcycles or scooters are exempt from excise taxes. This exemption is available under the "BE in Singapore" program of the Tourism Board of the Republic of Singapore.
Goods and Services Tax (GST)
Goods imported into Singapore for domestic consumption are subject to Goods and Services Tax (GST). The GST is administered by the Internal Revenue Authority of Singapore (IRAS) and is collected by Singapore Customs. GST on all categories of goods (taxable and non-taxable) is calculated at an ad valorem rate of 7% of the value of goods.
Taxable base for calculation of GST is taken from CIF (Cost, Insurance, freight) plus the cost of all duties and other expenses, even not reflected in the invoice. In some customs programs GST can be temporarily not charged (up to the moment of consumption of goods). Please note that wine for use at wine fairs, as well as other events belonging to the MICE category (conferences, official meetings, exhibitions, trainings, etc.) are exempt from GST. This exemption is part of the BE in Singapore program developed by the Tourism Board of the Republic of Singapore.
If you work in an area where GST applies, we recommend that you register with the Internal Revenue Authority of Singapore (IRAS) to collect GST. In this case, you will be able to invoice your clients with GST, as well as get a refund of GST paid on imported goods, if the goods have been subsequently exported out of the country.
Please note that Singapore has special programs for big players:
The Large Exporter Program is designed to facilitate the cash flow of large exporters
The GST deferral program for imports is designed to facilitate the cash flow of taxable traders. Allows you to defer payment of GST until the final point of importation.
Singapore Customs Fees.
The most efficient way to pay customs fees, charges, duties and GST in Singapore is a GIRO transfer to Customs directly from your bank account.
Trade Finance and Insurance
Singaporean companies often resort to bank loans, letters of credit, and transaction insurance to cover the financial risks associated with trade.
Letter of Credit
A Letter of Credit is a common practice in Singapore where payment to the exporter is guaranteed by the buyer's bank. This payment option is convenient for both exporters and buyers. The exporter is assured of payment before the goods are shipped and the buyer does not need to make any payments until the goods are received.
- Overdraft - granting money to the client by crediting his current account by the bank within the established limit. Interest is paid only on the excess amount.
- Revolving credit line implies restoration of the debt limit upon obligatory repayment by the borrower of the funds previously received from the bank. If you open a credit line, you can regularly withdraw and replenish the money.
- Term loans - the loan is usually secured by collateral.
- Cargo Loan - Loans obtained to finance a confirmed order, subject to the creditworthiness of the company that placed the order.
- Inventory Financing - Loans obtained to finance unsold inventory.
- Factoring - Factoring agents, such as banks and financial institutions, credit the company by buying back short-term receivables on your unpaid bills. When you need to make payments, you provide the factoring company with invoices and other payment documents. The factoring company discounts these documents and pays you up to 95-85% of their value.
Insurance
Trade credit insurance gives companies protection against the risk of possible non-payment by buyers. If the buyer fails to pay for your goods on time, the insurer, after checking the circumstances, will pay you the amount owed. International Enterprise Singapore, a government-owned company, offers Trade Credit Insurance at very attractive rates.
Storage of goods
Free Economic Zones
Free Trade Zones (FTZs) are special areas at airports and seaports where goods and services tax (GST) and other taxes are temporarily waived for imported goods.
You do not have to pay the due duties and taxes until after the goods leave the FTZ and enter the customs zone. All taxable goods are kept in the FTZs , except alcohol and tobacco products.
When exporting goods for export (re-export), FTZs can greatly help your cash flow, as you do not have to pay duties and GST on imports.
You should know that goods that come in by rail and road are not stored in FTZs and are subject to all taxes and duties.
Licensed warehouses with zero GST
You can store taxable goods in licensed warehouses, which will give you the opportunity to defer payment of duties and taxes until the goods leave the warehouse and are shipped to the local market.
You can store non-taxable goods in zero GST warehouses, allowing you to defer payment of GST on goods until the goods leave the warehouse and are shipped to the local market.
Clearance of Goods.
Initial clearance of all persons, vehicles and cargo entering Singapore is conducted by Immigration and Border Control Singapore (ICA) and all trade and customs matters are forwarded to Singapore Customs for further action. The customs clearance procedure depends on the type of cargo and the mode of transport by which imports are made.
Export clearance for regular and containerized cargo
For taxable and controlled goods, an OUT permit must be obtained from customs or other controlling authorities before exporting. The OUT permit must be presented to officers from the Immigration and Border Control (ICA) at the point of inspection for the goods to be cleared. Customs seals on the shipment, if any, will be checked by ICA officers at the exit point before the shipment is released.
For exports of non-taxable and non-controlled goods by air or sea, the trader may clear the cargo first at the checkpoint and present the clearance to Customs within three days of export. If goods are exported by road, the trader must present OUT permit at the time of export clearance.
Import clearance for regular shipments
You have to show IN permit (or import permit) and all required documents (invoices, waybills, etc) at the border in order to clear the imported goods.
If the goods are intended for local consumption, all applicable taxes and GST must be paid before importation of the goods.
Import clearance for containerized cargoes
The procedure for containerized cargo clearance is different from regular cargo. There are two main types of containerized cargoes:
Full container load (FCL) is a container loaded with goods for one recipient, or cargo from one shipper
Partial Container Load (LCL) is a container loaded with goods for more than one consignee or goods for more than one shipper.
Procedure for FCL containers
FCL containers are generally not sorted in Free Trade Zones (FTZs), screening, inspection and sealing takes place before the cargo arrives at the FTZs. Once containers are sealed and delivered to FTZs, consignees or their shipping agents are required to make arrangements with Singapore Customs to supervise the containers. During import, the integrity of customs seals may not be disturbed without the written permission of Singapore Customs.
Containers that do not require customs inspection are given SNR status (No Sealing Required) and will be allowed through by ICA staff without being sealed.
Procedure for LCL Containers
LCL containers are inspected in FTZs and cleared before the cargo arrives at the FTZs, just like regular cargo.
For more detailed information you can contact our specialists.
FCL containers are generally not sorted in Free Trade Zones (FTZs), screening, inspection and sealing takes place before the cargo arrives at the FTZs. Once containers are sealed and delivered to FTZs, consignees or their shipping agents are required to make arrangements with Singapore Customs to supervise the containers. During import, the integrity of customs seals may not be disturbed without the written permission of Singapore Customs.
Containers that do not require customs inspection are given SNR status (No Sealing Required) and will be allowed through by ICA staff without being sealed.
Procedure for LCL Containers
LCL containers are inspected in FTZs and cleared before the cargo arrives at the FTZs, just like regular cargo.
For more detailed information you can contact our specialists.