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Singapore has long been known as an important ‘port of call’ for traders, especially those dealing between the eastern and the western time zones. According to the latest statistics by the World Trade Organization, Singapore is the 14th largest merchandise exporter in the world and has a trade to GDP ratio of 404.9. If you plan to incorporate a Singapore trading company and start an import/export business, this guide will serve as a good starting point.
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.
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, transshipment, 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. Certificates of Origin are of two types:
You can apply for a CO through TradeNet® or via your freight forwarder or cargo agent.
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 imported into Singapore are subject to prevailing (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 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.
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:
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:
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.
Hawksford can help you with registration, annual filings, accounting, tax filings and on-going legal compliance of your Singapore trading company.
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Hawksford can help you with registration, annual filings, accounting, tax filings and on-going legal compliance of your Singapore trading company.
Hawksford's experienced and professional staff will be able to guide you through moving or setting-up your business in Singapore.
With our expertise, we can assist you in setting-up your business structure right the first time.
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