Over the years, Singapore has earned a reputation for its favourable regulatory environment for import-export businesses. The country’s business-friendly nature and strategic location have facilitated a business-friendly environment for the growth of trading companies. For international investors who wish to import or export products to and from Singapore, has no better place to be than in the city-state. However, they are required to meet several requirements first.
When businesses manufacture in or import dutiable goods into Singapore, the goods will be subjected to excise and/or customs duty. Investors should know the difference between the two and also note that certain goods may receive tax exemption while others are dutiable.
Excise Duty vs Customs Duty
Excise duty refers to a duty levied on goods manufactured or produced within Singapore.
Customs duty, on the other hand, is a duty levied on goods that are imported into Singapore. The imposed duties are either based on specific rares or calculated using the ad valorem system. Specific rates are usually applied according to the per unit weight of the goods. An ad valorem rate is assigned as a percentage of the product’s customs value.
Types of Dutiable Goods in Singapore
Dutiable goods in Singapore are classified into 4 categories:
- Tobacco products
- Motorized vehicles
- Biodiesel blends and petroleum products
- Alcohol Products
An overview of how these duties are calculated for these goods have been provided below:
The formulae below can be applied to calculate duties payable for tobacco products:
- Duties payable for tobacco products except for cigarettes = Total weight in Kilograms X Excise duty rate
- Duties payable for cigarettes = Total number of cigarette sticks X Weight of each stick X Excise duty rate
The formula below can be used to calculate duties payable for motorized vehicles:
- Duties Payable for motorized vehicles= Excise duty rate X Customs Value
Biodiesel blends and petroleum products
The following formulae can be used to calculate the duties payable for biodiesel blends and petroleum product:
- Duties payable for petroleum products = Total volume of the product X Excise duty rate
- Duties payable for biodiesel blend = Total Volume of Diesel X Excise duty rate
- Duties payable for compressed natural gas = Total weight of goods X Excise duty rate
The below formula can be used to calculate duties payable for alcohol products:
- Duties payable for alcohol products = Total quantity (in litres) X Percentage of alcoholic strength X Excise and/or customs duty rate
Importers and exporters must be well-aware of the duty expenses. You must also note that there are various other miscellaneous expenses that the business might accrue. For instance, imported goods in Singapore are subjected to a 7% goods and services tax.
Wondering whether you should register GST for your business? Check it out here:
- Should I register GST for my company in Singapore?
- Should I register GST for my sole-proprietorship business in Singapore?
Even with all of these charges, there’s no doubt setting up trading companies in Singapore can prove very profitable for foreign investors. The first step to importing dutiable goods into the country is to get a Unique Entity Number and register with the Singapore Customs Authority. If you too are looking to incorporate an import or export-centric business in Singapore, you can contact us at Timcole.