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Guide on Setting up a Singapore Trading Importer and Exporter Company Business in Singapore
Industry Guide | Opening a Singapore Trading Importer and Exporter Company in Singapore
Given Singapore’s market dominance in the import/export trade, it has well-defined import/export procedures in place. Detailed below is an overview of the various aspects of trading in Singapore including: opening a customs account, applying for licences and permits, types of goods that can be imported/exported, taxes and fees, trade financing options, cargo clearance procedures, goods storage options etc.
Step 1: Incorporate a trading company
For starting a trading business in Singapore, you will need to incorporate a company first. For detailed information on this, refer to Singapore company incorporation.
Step 2: Register with Singapore Customs
All importers and exporters are required to activate their account with the Singapore Customs before they can import/export goods in and out of Singapore. Account activation is processed within 1-2 working days after submission of the application and you will be issued a Customs approval letter and is valid for as long as your company exists.
Step 3: Apply for licences and permits
You can engage a local freight forwarder to arrange the import and export for your items and they will handle the import/export licenses and permits, taxes and fees, cargo clearance procedures, and goods storage etc for you.
Alternatively, if you have a local staff / employment pass holders in Singapore, you can do it yourself and please refer to Freight Forwarders/Declaring Agents for the detail information.
The following is summarised some of the basic information you should made know about.
For import /export of all goods
For import of all goods (including controlled and non-controlled items) into Singapore, you are required to obtain an IN Permit through TradeNet® before goods are imported into Singapore.
For export of all goods (including controlled and non-controlled items) out of Singapore, you are required to obtain an OUT Permit through TradeNet®
Certain special scenarios such as importing/exporting trade samples of uncontrolled items of a total value not exceeding S$400/- on the CIF (Costs, Insurance and Freight) value may be imported/exported without a permit.
For import/export of controlled goods
The import/export of some goods are subject to the control of Controlling Agencies and are known as controlled goods. To import/export controlled goods you require a permit, in addition to the IN Permit and OUT Permit. You can submit the permit applications to the relevant Controlling Agencies through the TradeNet® system or your freight forwarder or cargo agent for processing and approval. Examples of controlled goods include cigarettes and tobacco products, drugs, petrochemicals, animals and food products.
According to the Singapore Customs Department, a broad list of controlled goods includes the following:
– Animals, birds and their by-products.
– Endangered species of wildlife and their by-products.
– Meat and meat products.
– Fish and seafood products.
– Fruits and vegetables.
– Arms and explosives.
– Bullet-proof clothing.
– Toy guns, pistols and revolvers.
– Weapons, spears and swords.
– Films, video and video games.
– Publications and audio records.
– Telecommunication and Radio Communication Equipment.
For a comprehensive list of controlled items, please click Goods Subject to Control.
Traders involved in the following must be licensed by AVA; For license application, you can refer to Licensing and Registration of Traders:
- import/export/transshipment of meat and fish products
- import/transshipment of fresh fruits and vegetables
- import/export/transshipment of processed food products * and Food appliances **
* Examples of processed food products including raw spices, raw or semi processed food ingredients, flour, bottled water, liquors, wines, confectioneries, noodles & pasta, beverages, etc.
** Food appliances are used for containing food. Examples would be plastic bowls and porcelain cups.
Not sure whether your products are required to apply for AVA license? You can contact AVA at AVA Quality Service Manager for the labels of the products for confirmation always (which should include the name, manufacturer and ingredients details).
Besides, you will need to get an acceptable regulated source documents from the importing country to certify the safety of this products. The examples of the acceptable regulated source documents are as follows:
- Certificate of HACCP (Hazard Analysis Critical Control Point)
- Certificate of GMP (Good Manufacturing Practices)
- Health Certificate (issued by competent food or veterinary authority of exporting country)
- Attestation of export (issued by competent food or veterinary authority of exporting country)
- Factory licence (issued by regulatory authority of the exporting country)
For other certificate, you will require to get AVA prior approval via email.
If your food product is not fall under AVA category, you are required to apply for HSA license or any other applicable license.
For import of high-technology items
Certain high-technology items are subject to export control by the exporting country and the Singapore importer may be asked to provide an Import Certificate and Delivery Verification (ICDV) by the exporter. Importers can apply for an ICDV from Singapore Customs. Items covered by an ICDV must be imported into Singapore directly, and are not to be diverted to other countries.
For export, transhipment, or transit of Strategic Goods
If you are going to export, tranship or bring in transit Strategic Goods, you must obtain a Strategic Goods Control (SGC) TradeNet Permit. Strategic goods are regulated by the Strategic Goods (Control) Act. The Act covers all goods and technology that are intended or likely to be used for weapons of mass destruction.
For export of local goods
Certain buyers may ask Singapore exporters for a Certificate of Origin (CO), that proves that your goods are made in Singapore. You can apply for a CO through TradeNet® or via your freight forwarder or cargo agent.
Taxes and Fees
Customs and Excise Duty
Certain goods that are manufactured in Singapore or imported into Singapore and are subject to customs and/or excise duties are known as dutiable goods. In Singapore, dutiable goods include: intoxicating liquors, tobacco products, motor vehicles and petroleum products. Duties are levied on an ad valorem basis or specific rate basis. An ad valorem rate is a percentage of the Customs value of the imported goods. A specific rate is a specified amount per unit of weight or other quantity such as $300.00 per kg. Duties may be temporarily suspended (up to the point of consumption) under the various Customs schemes.
Note that subject to qualifying conditions duty exemption is granted for wine used at wine exhibitions and conference events approved under the Meetings, Incentives, Conventions & Exhibitions (MICE) Incentive Scheme “BE In Singapore – BEIS” administered by the Singapore Tourism Board. Additionally, motorized bicycles that are not registered as motorcycles or scooters are exempt from excise duties.
Goods and Services Tax
Goods imported into Singapore are subject to prevailing Goods and Services Tax (GST) which is currently at 7%, if the goods are meant for local consumption. GST is administered by the Inland Revenue Authority of Singapore (IRAS) and collected by Singapore Customs. GST on all dutiable and non dutiable goods are payable on an ad valorem basis, i.e. 7% on the value of Goods. The GST taxable is calculated based on the CIF (Costs, Insurance and Freight) value plus all duties and other chargeable costs, whether or not shown on the invoice. GST may be temporarily suspended (up to the point of consumption) under the various Customs schemes. Note that subject to certain criteria GST relief is granted for wine used at wine exhibitions and conference events approved under the Meetings, Incentives, Conventions & Exhibitions (MICE) Incentive Scheme “BE In Singapore – BEIS” administered by the Singapore Tourism Board.
You can charge your customers GST if you register with IRAS to collect GST. You can also get a GST refund on GST paid on imports if the goods are later exported out of the country. You have to be GST-registered with IRAS to qualify for the refund.
Note: There are special schemes such as the ‘Major Exporter Scheme’ (designed to alleviate the cash flow of major exporters who have significant imports) and ‘Import GST Deferment Scheme’ (designed to alleviate the cash flow of taxable traders by deferring the import GST payment at the point of importation) to reduce the burden of GST.
Singapore Customs Fees
Singapore Customs charges procedural and administrative fees. The most efficient way is to pay all fees, duties and GST to Singapore Customs by GIRO, authorising Singapore Customs to make direct deductions from your bank account.
In Singapore, businesses often resort to loans, letters of credit and insurance to cover the financial risks involved in trading. However, you will need at least 1 to 2 year of business track records in order to apply for the trade financing always.
Letter of Credit
Letter of Credit (LC) is the common practice in Singapore where payment to the exporter is guaranteed by the buyer’s bank. This is the preferred payment option both among exporters as well as buyers because the exporter’s payment is secured before the goods are shipped and likewise the buyer need not make any payments until the goods are received. Based on the LC other financing options are also available viz:
- Back To Back LC – If an exporter has to procure goods from another third party to fulfill the buyer’s order, he may open an LC with his bank based on the Original LC of the buyer.
- Trust Receipt – An importer can get a loan from a bank based on the LC and the goods it promises he will be getting.
- Packing Credit – A loan or overdraft privilege based on an LC. It can be a form of pre-shipment financing (repayment is made when goods are shipped) or post-shipment finance (repayment is made when the buyer has paid for the goods).
Most banks in Singapore have taken cognizance of the huge import/export industry and offer competitive trade finance services including import products, export products and bank guarantees. Some of the financing options offered by banks are:
- Overdraft – You can overdraw your current account up to a maximum amount agreed with the bank. Interest is paid only on what is overdrawn.
- Revolving line of credit – You can arrange with a bank to have an agreed amount of funds made available to you at a fee. You can withdraw and top up the funds regularly.
- Term Loans – A loan made available against a collateral subject to approval by the bank.
- Transaction Loan – Loans obtained to finance a confirmed order subject to the creditworthiness of the company that placed the order.
- Inventory financing – Loans obtained against unsold inventories.
- Factoring Loans – Factoring agents like banks and financial institutions provide instant payment against your outstanding invoices. A fee of up to 15% is charged for collecting the payment from the clients.
Trade Credit insurance provides companies with protection against the risk of non-payment by buyers arising from commercial and non-commercial risks. Should buyers default on payment further to the stipulated due date and grace period, the insurer will pay upon verifying the validity of the claim. International Enterprise Singapore, a Government initiative, offers trade credit insurance at very attractive premium rates through its TCI Programme.
Depositing and Storing Goods
Free Trade Zones
– Free Trade Zones (FTZs) are designated areas in Singapore’s air and seaports where duties and Goods and Services Tax (GST) are temporarily suspended for the imported goods.
– You only have to pay the duties and taxes when the goods leave the FTZs and enter into customs territory for consumption. All dutiable goods can be stored in the FTZs except for liquors and cigarettes.
– If you import goods to export (re-exporting), then FTZs can help your cash flow greatly as you do not have to pay duties and GST on the imports.
– You should be aware that goods that arrive by rail and road are not deposited into FTZs and are subject to duties and taxes.
Licensed And Zero-GST Warehouses
– You can store dutiable goods in Licensed Warehouses so that GST and duties payable for the goods would be suspended until the goods are removed from the premises and brought into the local market for consumption.
– You can store non-dutiable goods in Zero-GST Warehouses so that GST payable for the goods would be suspended until the goods are removed from the premises and brought into the local market for consumption.
Clearance of Goods
Immigration and Checkpoint Authority (ICA) officers conduct checks on vehicles, cargo and persons entering the country, and refer trade and customs matters to Singapore Customs for follow-up. Clearance procedure depends on the type of cargo and the mode of transport. You can refer to http://www.customs.gov.sg for the details.