Overview: Setting Up An Import-Export Business In Singapore
In recent decades, Singapore has firmly established itself as a pivotal hub for international trade, bridging the gap between the Western and Eastern markets. With over 3,000 local and international supply chain and logistics companies operating within its borders, Singapore stands out as one of the world’s largest merchandise centres. The country’s dedication to infrastructural development, including harbours, airports, shipping lines, and roadways, has further enhanced its reputation as a premier trading destination. This comprehensive guide will provide you with the essential steps and information required to kickstart a successful import-export business in Singapore.
Why Singapore is a Key Trading Centre?
There are several compelling reasons behind Singapore’s ascendancy as a key trading centre:
- Strategic Location: Singapore’s central location in Southeast Asia makes it an ideal hub for international trade.
- Ease of Doing Business: The government’s commitment to reducing red tape and bureaucracy streamlines the process of starting a business.
- Political Stability: Singapore’s stable government promotes a safe environment for corporate operations.
- Superior Infrastructure: The nation has invested heavily in top-notch infrastructure, including world-class ports, airports, and logistics facilities.
These features have attracted about 70% of the world’s major commodity trading corporations, including Vitol, Wilmar International, and Golden Agri-Resources, which earn more than US$1 trillion in yearly revenue from their Singapore operations.
Forming an Import-Export Business in Singapore
If you’re wondering how to start an import-export business, the first step is to establish your company in Singapore. Singapore’s corporate entities are supervised by the Accounting and Corporate Regulatory Authority (ACRA). A private limited corporation is the best structure for a trading business. Foreigners can easily set up a company in Singapore by collaborating with a local corporate services provider like OnDemand International.
The key requirements for registering a private limited company in Singapore include
- Paid-Up Capital: The bare minimum paid-up capital is S$1, but maybe later be raised.
- Director: At least 1 Singapore Resident Director is required for every firm.
- Registered Address: A local registered address is mandatory.
- Shareholders: A company’s shareholders might range from one to fifty, and they can be either local or international people or corporate organisations.
- Company Name: The chosen name must be approved before the registration process begins.
Your firm will acquire a unique entity number (UEN) upon establishment, which is a standard and unique identifying number that simplifies intra-agency communication and integration.
Necessary Permits and Licenses for Operating Import-Export Business in Singapore
Securing the requisite licenses is the next crucial step when operating an import-export business in Singapore which also entails being a freight forwarder. Singapore’s specific licensing requirements may differ from those of other countries, necessitating thorough research when applying for export and import licenses.
Import or Export All Goods
For businesses intending to import or export all goods, including both non-controlled and controlled items, an IN Permit is obligatory for imports, while an OUT Permit is required for exports. In certain scenarios, such as the export or import of trade samples valued at no more than S$400, permits may be exempted.
Export Local Goods
When exporting local products, some buyers may request a Certificate of Origin, confirming the goods’ Singaporean origin. Two types of Certificates of Origin are available: Ordinary, which certifies that the exported goods are entirely Singaporean-made, and Preferential, which allows buyers to enjoy tax benefits.
Import or Export Controlled Goods
Food and livestock products, petrochemicals, medicines, and tobacco are all widely traded in Singapore. These items are subject to the regulations of controlling agencies. In most instances, an OUT or IN Permit must be obtained before proceeding with their import or export.
Import High-Technology Items
Certain high-technology devices are subject to strict export regulations, with Singaporean importers often required to furnish a Delivery Verification and Certificate of Import from the exporter. These permits can be obtained through Singapore Customs and are essential for items governed by these regulations.
Trade Insurance for Singapore Trading Business
While not mandatory, obtaining insurance for your Singapore Trading business is a prudent move, particularly to mitigate risks associated with lost goods, damage, or non-payment from buyers. Various types of insurance can safeguard your operations:
- Trade Credit Insurance: Protects your company from non-payment risks in both commercial and non-commercial activities.
- Marine Insurance: Covers goods throughout their journey, whether by sea, land, or air.
- Political Risk Insurance: Crucial for countries with volatile political environments, it safeguards against risks like confiscated goods and riots.
- International Trade Insurance: Also known as International Product Liability Insurance, this covers exports rejected by the importing country due to policy changes.
Financial Assistance for Import-Export Business in Singapore
Here are some of the options available for financial assistance for your trading business in Singapore. They are listed below:
- Corporate Bank Accounts for Your Singapore Import-Export Business: Opening a corporate account with a local bank is a crucial step for your import-export company. It ensures timely payments, access to world-class banking services, and secure fund management.
- Singapore offers a multitude of options for opening a corporate account, with trusted partner banks such as DBS Bank, OCBC Bank, UOB, Standard Chartered, Citibank, and HSBC, making the process seamless.
- Global Trader Programme for Import-Export Businesses: The Global Trader Programme (GTP) provides considerable tax benefits to import-export businesses. It offers a 5% or 10% company tax rate on eligible trade revenue for 3 or 5 years. This includes income from physical trading, brokering, and derivative trading.
- Business Loans: Most banks in Singapore offer various business loans, including unsecured business term loans, SME micro-loans, and SME working capital loans, to support your financial needs.
- Trade Credit Insurance Scheme (TCIS): TCI is an insurance policy that protects your company from buyer nonpayment. With appropriate qualifying requirements, the government can cover up to 50% of the minimum insurance premium for TCI plans sold by Singapore-registered credit insurers.
- Letter of Credit: The use of letters of credit (LC) is common in Singapore. This banking service guarantees timely payment from the buyer to the seller, eliminating the risk of non-payment against delivery.
If your import-export business qualifies, you can enjoy these financial benefits.
Loans Provided For Import-Export Business in Singapore
There are different types of loans provided for import-export business in Singapore is
- Overdraft: Banks may enable you to overdraw your current account up to a certain limit. Only interest on the amount overdrawn is due.
- Transaction Loans: These loans are designed to finance confirmed orders, contingent on the creditworthiness of the ordering business.
- Term Loans: Issuing banks make term loans when corporations submit collateral, requiring authorization.
- Factoring Loans: Factoring agents, which include financial institutions and banks, provide immediate payments on overdue bills. They typically charge a fee of up to 15% for collecting payments from clients.
Goods And Services Tax
Important items bound for the Singapore domestic market are subject to a 7% of Goods and Services Tax (GST). This tax is charged on both non-dutiable and dutiable items and is administered by the Singapore Inland Revenue Authority and collected by Customs. It is computed based on goods, insurance, charges and other chargeable expenditures.
Customs and Excise Duty
Tobacco items, intoxicating liquors, petroleum products, and motor vehicles imported or manufactured in Singapore are liable for excise and customs taxes. These duties can be fixed or ad valorem, computed as a proportion of the customs value. Certain customs regimes, such as the Free Trade Zone, provide for temporary tariff suspension.
Singapore’s favorable business climate and advantageous position in Southeast Asia make it a lucrative place to establish an import or export business. Singapore’s government offers a number of incentives and assistance programs, such as tax breaks, subsidies, and simple access to capital, to help overseas investors launch their firms. Every business in Singapore must register with the ACRA, which serves as the country’s primary business entity regulator. Additionally, if you set up an import or export company you must register as a merchant with Singapore Customs and acquire licenses and permits.
Contact our professionals at OnDemand International if you’re interested in setting up an import or export company in Singapore. Our professionals will assist you with obtaining the necessary licenses and permits and registering you with the relevant authorities.
The major reasons why Singapore is best for the transport of goods is because it is in a good location, has the least corruption, and the tax system there is attractive too.
Generate a customs account, become a registered declaring agent, check if your products are considered controlled or prohibited, furnish security, issue a customs approval, and hand over cargo clearance documents.
If all the necessary needs are met, the corporation will only be eligible if it has a percentage of 30% internal shareholding, a team of 200 workers, and yearly revenue of at least S$100 M.
It is a loan-providing program, backed by the government of Singapore for small enterprises in the region. Companies that have yearly revenue of $1 M or less and employees less than 10 can take up this loan and get $100K.
Yes, there are two kinds of loans for small enterprises, SME micro loans, and Term loans.