If one considers the way Singapore’s market dominates import and export trade, one will realize that there are well-defined import/export procedures in Singapore’s market. As you read on, you will find the various trading aspects in Singapore. Some of the trading aspects include applying for licences, opening a customs account, trade financing options, the kinds of goods that can be imported/exported, cargo clearance procedures, goods storage options, taxes and fees etc.
1st Step: Incorporate a Trading Company
Before you start any trading business in Singapore, you will have to incorporate a company.
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2nd Step: Register with Singapore Customs
If you want to be importing and exporting goods, you have to activate your account with Singapore Customs. It takes 1 to 2 working days to process account activation. The custom approval letter that was issued to you will remain valid all through the years that your company exists.
3rd Step: Apply for Licenses and Permits
A local freight forwarder can help you to arrange the import and export of your items and also take care of the import/export licenses and permits, cargo clearance procedures, taxes and fees for you.
Alternatively, you can handle all these processes by yourself if you hire local staff or employment pass holders.
The following summarizes some basic information you should know:
For Import/Export of all goods:
You need to obtain IN Permit before importing goods into Singapore. TradeNet is the right channel through which you can obtain the IN Permit. The IN Permit allows you to import both controlled and non-controlled items.
You need to obtain an OUT Permit before exporting goods out of Singapore. TradeNet is the right channel through which you can obtain the OUT Permit. The OUT Permit allows you to export both controlled and non-controlled items.
However, you may import/export trade samples of uncontrolled items without a permit if the total value of such items does not exceed $400. The same thing applies to goods that are imported/exported on the CIF (Costs, Insurance and Freight).
For Import/Export of controlled goods:
Some goods are being controlled by Controlling Agencies, which means you need more than just IN Permit and OUT Permit to import or export those goods. You can apply for the permit for importing/exporting controlled goods through the TradeNet or your cargo agent, or your freight forwarder.
Examples of controlled goods include petrochemicals, cigarettes and tobacco products, drugs, animals and food products.
The Singapore Customs Department declares the following goods as controlled goods:
- Meat and meat products
- Animals, birds and their by-products
- Fruits and vegetables
- Endangered species of wildlife and their by-products
- Bullet-proof clothing
- Fish and seafood products
- Arms and explosives
- Pharmaceuticals
- Toy guns, pistols and revolvers.
- Poisons
- Medicines
- Weapons, spears and swords
- Publications and audio records
- Films, video and video games
- Telecommunication and Radio Communication Equipment
For more information, click here to see the comprehensive list of controlled items.
SFA License
For Import/Export of food:
Every trader who is involved in the following are expected to obtain a license from SFA:
- import/transshipment of fresh fruits and vegetables
- import/export/transshipment of fish and meat products
- import/export/transshipment of food appliances and food products
Some examples of processed food products include raw spices, flour, raw or semi-processed food ingredients, liquors, bottled water, wines, confectioneries, beverages, noodles and pasta, etc.
The purpose of food appliances is to contain food. Examples include porcelain cups and plastic bowls.
If you are unsure whether you are expected to apply for an SFA license, you can visit Singapore Food Agency Headquarters to get the labels of the product you are dealing with.
You also need to get acceptable regulated source documents from the country where the products are coming from to certify their safety. Some examples of acceptable source documents include the following:
- Certificate of Good Manufacturing Practices (GMP)
- Certificate of Hazard Analysis Critical Control Point (HACCP)
- Health Certificate (issued by a qualified veterinary or food authority of the exporting country)
- Factory license (issued by the exporting country’s regulatory authority)
- Attestation of export (issued by a qualified veterinary or food authority of the exporting country)
You are expected to get SFA prior approval through email for other certificates.
If your food product does not fall under the SFA category, you should apply for HSA license or other applicable licenses.
For Import of high-technology items
Some high-technology items are controlled by the exporting country, so the Singapore importer may have to provide ICDV (Import Certificate and Delivery Verification). Importers can contact Singapore Customs to apply for the ICDV. Any item that ICDV covers must be imported directly to Singapore and must not be diverted to another country.
For Export/Transit/Transshipment of strategic goods
If you want to export, tranship or import strategic goods, you need to get Strategic Goods Control TradeNet Permit. The Strategic Goods (Control) Act regulates all kinds of strategic goods. The Act covers all technology and goods that are likely or intended to be utilized for weapons of mass destruction.
For Export of local goods
Some buyers can demand a Certificate of Origin (CO) from Singapore exporters in order to verify if your goods are manufactured in Singapore. You can apply for a Certificate of Origin through TradeNet or your cargo agent or freight forwarder.
Taxes and Fees
Customs and excise duty
Goods that are made in Singapore or imported into Singapore and are subject to excise and/or custom duties are referred to as dutiable goods. The goods that are referred to as dutiable goods in Singapore include motor vehicles, petroleum products, tobacco products and intoxicating liquors.
Duties are levied on a specific rate basis or ad valorem basis. A specific rate imposes a specified amount per unit of weight of the goods. An ad valorem rate is charged on a certain percentage of the Custom worth of the imported goods. Sometimes, duties may be temporarily suspended under the different Customs schemes.
💡 Read more on Singapore custom duty rate and dutiable goods.
Note that duty exemption is granted for wines that are used at conference and wine exhibitions events approved under the Meetings, Incentives, Conventions and Exhibitions MICE Incentive Scheme in Singapore. Also, any motorized bicycle that is not registered as a motorcycle or scooter is exempted from excise duties.
Goods and Services Tax (GST)
Goods that are imported into Singapore for local consumption are subject to prevailing Goods and Services Tax (GST). Presently, the GST rate is 7% on the value of goods.
Inland Revenue Authority of Singapore (IRAS) is responsible for administering GST, and Singapore Customs is responsible for collecting GST. The GST for both dutiable and non-dutiable goods is to be paid on an ad valorem basis, which is 7% of the value of goods.
The GST taxable is calculated using Costs, Insurance and Freight (CIF) value together with all duties and other chargeable costs, including the ones that do not appear on the invoice. GST may be temporarily suspended under different Customs schemes.
💡 Read more on GST on customer accounting for prescribed goods.
Note that under certain criteria, GST relief is granted for wines that are used at conference and wine exhibitions events approved under the Meetings, Incentives, Conventions and Exhibitions MICE Incentive Scheme in Singapore.
If you have registered with IRAS to collect GST, you are free to charge your customers GST. Also, you can get a GST refund on GST that you paid on imports if you later export the goods out of Singapore. You must be GST-registered to qualify for the refund.
💲 Do you need to register GST for your business? Find out here: Sole-Proprietorship business | Private Limited company
Note: There are some special schemes such as Import GST Deferment Scheme (designed to facilitate the cash flow of taxable traders through the deferment of import GST payment at importation point) and Major Exporter Scheme (designed to facilitate cash flow of major exporters with significant imports).
Singapore Customs fees
Singapore Customs will charge procedural and administrative fees. GIRO offers the easiest way to pay all fees, GST and duties to Singapore Customs. You need to authorize Singapore Customs to deduct money directly from your bank account in order to pay with GIRO.
Trade Financing
In Singapore, it is common for businesses to resort to loans, insurance, and letters of credit to cover the financial risks associated with trading. However, you must have a minimum of 1 to 2 years of business track records to apply for trade financing.
Letter of Credit
Letter of Credit (LC) is often used in Singapore in a situation where an exporter needs a payment guarantee from the buyer’s bank. This payment method is preferred among exporters and buyers because it secures the exporter’s payment before the goods are shipped, and the buyer does not have to pay before receiving goods.
Based on the LC, a few other financing options are available via:
- Trust Receipt – An importer can obtain a loan from a bank on the basis of LC and the goods which the importer will be getting.
- Back To Back LC – If an exporter has to buy goods from a third party to fulfill the buyer’s order, he has the right to open an LC with his bank on the basis of the Original LC of the buyer.
- Packing Credit – This has to do with overdraft or loan privilege based on an LC. It may be a form of pre-shipment financing (a situation where repayment is made as soon as goods are shipped) or post-shipment finance (a situation where repayment is made after the buyer pays for the goods).
Loans
Almost all the banks in Singapore are aware of the impact of the import/export industry on the economy, which is why they offer competitive trade finance services, including export products, import products, and bank guarantees.
Some financing options that banks offer are:
- Overdraft – You have the privilege to overdraw your current account up to a certain amount agreed with the bank. You will pay interest only on what you overdraw.
- Revolving line of credit – You can make an arrangement with a bank to provide an agreed amount of money to you at a fee. You can withdraw the money or top it up regularly.
- Term Loans – This is a loan made available against collateral that is subject to bank approval.
- Transaction Loan – This kind of loan is obtained to finance a confirmed order that is subject to the creditworthiness of the company placing the order.
- Factoring Loans – Factoring agents like financial institutions and banks provide instant payment against outstanding invoices that you have. A fee of up to 15% will be charged for receiving the payment from the clients.
- Inventory financing – This is simply a loan obtained against unsold inventories.
Insurance
Trade Credit Insurance (TCI) protects companies against the risk of non-payment by buyers. If a buyer does not pay after the agreed due date and grace period is over, the insurer will pay after verifying the validity of the claim.
International Enterprise Singapore, which is a Government initiative, offers trade credit insurance to companies at attractive premium rates through the TCI programme.
Depositing and Storing Goods
Free Trade Zones
Free Trade Zones exist in some parts of Singapore. Free Trade Zones (FTZs) are specified areas in Singapore’s seaports and air where duties and GST are temporarily suspended for imported goods.
You are required to pay duties and taxes only when the goods leave the FTZs and get to customs territory for consumption. You can store all dutiable goods in the FTZs except for cigarettes and liquors. If you import goods with an intention to re-export them, then FTZs can facilitate your cash flow greatly since you won’t need to pay GST and duties on the imports.
Note that goods that arrive by road and rail are not deposited into FTZs, so they are subject to taxes and duties.
Licensed and Zero-GST warehouses
Dutiable goods can be stored in Licensed Warehouses to avoid paying GST and duties until you remove the goods from the premises and bring them into the local market for consumption.
Non-dutiable goods can be stored in Zero-GST Warehouses to suspend the GST payable for the goods until you remove the goods from the premises and bring them into the local market for consumption.
Clearance of Goods
All vehicles, cargo and persons entering Singapore will be checked by Immigration and Checkpoint Authority (ICA) officers. If ICA officers come across any trade and customs matter, they will refer such a matter to Singapore Customs for proper follow-up.
Clearance procedures depend on the mode of transportation and the type of cargo.
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