Setting Up An Import Or Export Company In Singapore: Regulations & Duties

Singapore is now the globe’s fourteenth largest supplier and fifteenth biggest importer. Setting up an import or export company in Singapore is the ideal thing to do so.

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    setting up an import or export company in singapore

    Overview: Setting Up An Import Or Export Company In Singapore

    Singapore is a major player in international trade. It has emerged as a key financial route in the world supply chain due to its geographical location in the heart of Southeast Asia, as well as its vast sea and air links that promote inter-regional & worldwide commerce. It is now the globe’s fourteenth largest supplier and fifteenth biggest importer. Setting up an import or export company in Singapore is the ideal thing to do so.

    If you intend to perform export, import, or transportation operations in Singapore, this post will walk you through the process of forming a trading firm, the appropriate permission criteria, and the future compliance requirements that you must consider.

    Why Singapore Is A Major Trading Hub?

    Singapore’s rise as a major trading hub can be attributed to several factors. These are they:

    Geographically advantageous site: Singapore is located on a crucial sea route that transports a massive volume of goods (worth over $5 trillion annually) between both the East and the West. In reality, Singapore handles approximately 30% of all Asian trade.

    Superior Infrastructure: As per a survey, Singapore holds the nicest facilities among the globe’s finest cities.

    Regulations that are beneficial to business: The nation holds the second position for ease of doing business. Singapore’s open attitude toward products importation and exportation, simplicity of company formation, and low bureaucratic barriers all add to the country’s high position.

    The tax system is appealing: Individual and corporate tax rates both are reasonable. Furthermore, there are several tax relief programs accessible. Singapore has signed over 70 double tax avoidance treaties, simplifying foreign trade by removing double taxation.

    Mechanism of financial stability: Singapore’s economic system is closely linked to global capital markets. There are around 500 global financial organizations in the country. For commodity markets in Asia, the nation supplies 25-35 percent of financial services.

    Corruption is minimal: Singapore is rated fourth globally. the country is rated fourth worldwide. Contracts are observed and maintained in this rule-following nation. Nepotism does not exist.

    Manpower with expertise: Singapore’s commerce and marketing sector employ over 14,000 people, and this little nation of about 5 million people boasts the world’s fourth-largest supply of trading ability, behind London, New York City, and Houston. A university education degree is held by 47 percent of skilled citizens. Nonetheless, the nation’s labor compensation is modest.

    Requirements For Setting Up Import Or Export Company In Singapore

    You must first establish your Singapore business before you can conduct business. The ACRA (Accounting and Corporate Regulatory Authority), which is Singapore’s primary regulator of business entities, is the firm registrar. The process is comparable to that of forming any other business – it’s simple and quick. A privately owned corporation is the best option for a trading company. To establish their firm, expatriates must cooperate with a Singapore-based corporation service company, like us – ODINT Consulting.

    The following are the basic conditions for forming a private limited corporation:

    1. The minimal paid-up investment is only S$1, and this can be raised at any moment.
    2. A firm can have anything from one to fifty stockholders, who could be people or major corporations.
    3. Singapore-based company secretary should be appointed.
    4. A firm should have at least one director who is based in Singapore.
    5. Before continuing with the incorporation, the firm name should be authorized.
    6. A regional registered address is necessary for a business.

    Following incorporation, the firm will be assigned a UEN (Unique Entity Number) which is a standardized and distinctive identifying number for every Singapore company.

    Regulations On Import And Export Of Goods From Singapore

    As soon as you have established your company, and gotten its Unique Entity Number, you can start your business operations. Keep in mind that your firm should go by the important export or import guidelines mentioned below to stay in compliance with all the laws.

    Importing items into Singapore

    As per the legislation of Singapore, importation is getting good into the main territory except for the items that are already in transit, be it from a free trade zone, or any place. To start the importation activity, one must get the important approvals by abiding by the steps mentioned below:

    Open a Customs Account

    Firstly, one must start the firm’s Customs Account at the website of Singapore Customs, after that, you’ll get an approval letter. The service of activating a Custom Account is free and generally can be fulfilled on the same day. Your financial service provider can complete this task on your behalf.

    File a request for an Inter-Bank GIRO Account

    To fulfill taxes, duties, pay fees, and other kinds of charges on the services offered by the Customs Account, one will have to issue and handle an Inter-Bank GIRO (IBG) account. This account will help you in completing payments straight from your bank account to your Customs account. The request for the IBG account is given to the Department of Customs. This task can also be done by your financial service provider.

    Furnish security

    Once you obtain an IBG account, in some situations, the authorities need your declaring associate or you as an importer to offer corporate security.
    But, who is a declaring agent?
    A declaring agent is a firm submitting a request for a license, permit, certificate, or any other paper or type of permit on an importer’s behalf. Conditions, when corporate security is needed, can be during goods import involving temporary goods imported for permissible reasons, dutiable goods, and to activate licensed premises like excise factories and licensed warehouses.

    Apply for licenses and permits

    To transport the goods, you’ll require a customs license. You can enroll as a declaring agency or designate a declaring representative to operate on your account as a supplier. Permit applications are posted online using the automated portal by the declaring agency and can also be filed by your commercial service provider.

    Some commodities, however, are classified as regulated goods under Singapore law. Before they can be transported to Singapore, they need an extra license from Competent Authorities (CA). Get the required paperwork for clearing customs.

    The final phase is cargo certification once you’ve gotten all of the relevant licenses. At a point of entry, the relevant documents should be shown, the most important of which is a hard copy of the granted customs permit. The bill, shipping documents, and contract of carriage or airway bill are examples of supporting documentation.

    This documentation must be kept in either digital or physical form for 5 years starting from the date of customs permission issuance. Certain commodities, including firearms, nuclear materials, pornographic materials, replicas of copyrighted publications, etc, are illegal and should not be transported across into Singapore under any circumstances. The whole list can be found in the Exports and Imports Rules.

    Goods export

    Singapore legislation governs export as transporting products out of the country’s customs jurisdiction — excepting transhipped or transit commodities — by any method, to any destination, along with a free trade zone. The process of meeting export regulations is comparable to the process of importation. The steps outlined below must be followed.

    Customs Account Activation

    You would get a Customs authorization letter after activating your Customs Account on the Singapore Customs site. Your business services supplier can handle most of these responsibilities.

    Request permits and licenses

    To promote exports, your business will need a customs license. You can either enroll as a declaring agency yourself or choose someone to operate in your place. Via the TradeNet system, the relevant permit requests are submitted online. Your business service provider can help you with all of these chores as well.

    Just like in the importation of goods, extra licenses or permits are needed from the particular CA (Competent Authorities) to export strategic or competent goods.

    Controlled Goods

    Let’s take a look at some examples of this category and the important competent authorities where you can get important approvals. Some of the controlled goods for which you will have to get approval from the commissioner or police are replica or toy guns, handcuffs, helmets used for protection in wars, etc.

    Strategic Goods

    This section includes commodities and technologies that are designed to be utilized as nuclear weapons or are probably to be utilized as such. You must register for a Strategic Goods Control License via the TradeNet platform if you intend to transport Strategic Goods. The complete list can be found in the Strategic Goods (Control) Order.

    Obtain Customs Clearance Papers

    The export authorization, together with the other accompanying paperwork, must be submitted to Customs (like the invoice, the packing list, and the bill of lading or airway bill). Your permission number should be provided too. Keep track that by the TradeNet network, you can obtain an origin certificate for any shipped items created in Singapore; this certificate might well be required in your case.

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      Regulations On Import And Export Of Goods Transiting Through Singapore

      Transiting is defined in Singapore law as bringing products into the nation only for the requirement of transporting them to another jurisdiction, whether according to the same or some other mode of transportation. This notion is also referred to as “transshipment.”

      Your trading firm will be designated a transshipment agency if it engages in goods transport via Singapore services. As a result, you would be estimated to be responsible for your products’ activity while they are transiting through Singapore.

      Please follow the following steps to obtain the relevant permits and authorization from the relevant Competent Authorities.

      Generate Customs Account

      The first step to be taken by your trading firm should be to generate its customs account at the site of Singapore customs. You will then get an approval letter and this service is free of cost.

      Become a registered Declaring and Transhipment Agent

       Now in the next step, you’ll have to register yourself as a declaring agent to carry out import or export activities. Additionally, your firm should be authorized as a transshipment agent. It is to be noted that for this requirement, your firm should be filed with ACRA as a freight forwarder, air cargo agent, or shipping agent.

      Once your application regarding the Singapore customs gets considered for the post of declaring and transshipment agent, it sends an email to notify you that your firm is filed as a declaring agent. Once your registration is approved, your firm can move to the further steps important to submit requests to get the transshipment permit, the main transiting document.

      Verify if your items are prohibited or controlled

      Ensure that the products you wish to transport are not controlled, strategic, subjected to limitations by Singapore’s competent authorities, or prohibited. The steps remain the same as the ones explained in the importing and exporting sections. If needed, file for important approvals to Singapore’s competent authorities.

      Furnish Security

      To tranship dutiable items like liquor, motor vehicles, or tobacco, you need to furnish security as a Banker’s guarantee, Insurance bond, or finance company guarantee. The process is just like the one mentioned above for goods import. On the customs page, you will get all the other important details security amount, and more.

      File for Customs Transhipment Permit

      One should file for the necessary transshipment approval whenever it is needed. For example, whenever transhipping items from one FTZ to another, you require an Inter-Gateway Movement permit.

      Set Documents for Cargo Clearance

      Now when you are done with all the above-stated steps, in the last stage you need to show your items with custom approval’s printed copy and all the other necessary documents like bill of lading, packing list, invoice, or air waybill to the officers appointed at the exit and entry checkpoints.

      Regulations On Import And Export Of Goods NOT Transiting Through Singapore

      Only importing, exporting, and transportation operations are covered by Singapore’s commerce and associated customs laws. These scenarios relate to items that are carried into, out of, or via Singapore’s jurisdiction. Whenever your Singapore-established firm wants to trade internationally or transit products through the territory of a third country, the laws of those nations will apply.

      It’s worth noting that, throughout most circumstances, if you sell and buy things overseas on a routine basis, the rules of the nation where you perform commerce will need you to establish as a corporation. In most cases, you must select between forming a subsidiary firm, operating through a corporate body, or using another legal structure specified by national legislation.

      When preparing to conduct trade business operations in another country, ensure you comply with local customs, taxes, and corporation laws.

      Storing Goods

      Warehouses in Free Trade Zones

      These buildings are in free trade zones (FTZs), which allow businesses to acquire, sell, and distribute products without paying customs, tax, or GST. Except for alcohol and nicotine, all commodities, even those subject to duty, can be kept in FTZs. Goods arriving by train and road, on the other hand, cannot be placed in FTZs and are liable to tariffs and taxes.

      Storage facilities that do not charge GST

      The Zero-GST Warehousing Scheme (ZGS) permits qualified enterprises to keep solely non-dutiable products in a specified space permitted by Customs Authorities for an indeterminate amount of time while the GST is deferred.

      Warehouses with a License

      Just dutiable items, such as liquor, cigarettes, automobiles, and fuel, can be stored. Other items, like duty-paid products, may be stored in non-designated parts of the same storage facilities. Remember that although the items are in storage until they are withdrawn from the facilities and introduced into the marketplace for use, the GST and levies are deferred.

      GST and Duty

      Importing

      Import of dutiable and non-dutiable products into Singapore for local consumption requires payment of tax and GST. The GST is applied to the price, insurance, and shipping (CIF) worth a percentage of 7%. The Singapore Customs collects GST, which is managed by the IRAS (Inland Revenue Authority of Singapore).

      Import duties must be charged on a variety of goods, including liquors, cigarettes, automobiles, and oil products, with various rates for every type.

      Transit and exporting

      When shipping from or transporting goods via Singapore, zero GST or charge is applied.

      It’s worth noting that paying customs and GST using the GIRO platform, as described above, is by far the most suitable way. It permits Singapore Customs to deduct money directly from the applicant’s bank account.
      Read More: Singapore GST Registration

      Financial Considerations

      Financial Bank Account in Singapore

      One of the most important parts of any Singapore commerce business is to register a business account with a bank branch. This will assure prompt payment, trade-related usage of A-one financial products, and safekeeping of your money. Businesses have various alternatives for opening accounts due to the vast number of financial institutions. Our company, ODINT Consulting suggests to you a list of reputable financial institutions where you may easily create an account, including, OCBC Bank, DBS Bank, Standard Chartered, UOB, HSBC, and Citibank.

      Loans for Small Businesses

      Business loans are available from the majority of Singapore’s banking firms. The most common types of corporate loans are as follows:

      1. SME Micro Loan A government-backed funding program for small businesses in the area. Businesses with an annual turnover of less than $1 million and fewer than 10 workers are eligible for up to $100K in financing.
      2. Term loan for a business that is not guaranteed. A hefty payment normally ranges from $50,000 to $300,000. Payments are made in equal monthly installments over 3 to 5 years.

      Global Trader Program

      The GTP (Global Trader Program) is indeed a very appealing solution for your firm to reduce its tax liability. For 3 – 5 years, the GTP offers a lowered company tax percentage of 5% or 10% on eligible trading wages. Physical trading revenue, actual trade brokerage income, & commodity derivatives income are all examples of acceptable trading income.

      Trade Credit Insurance Scheme (TCIS)

      Trade Credit Insurance (TCI) is a form of insurance that any business can acquire to safeguard itself from purchaser non-payment, allowing you to attract new clients with more confidence and lower risk of default. Assuming your business qualifies, the state may cover up to 50% of the minimal insurance costs for TCI plans offered professionally by Singapore-registered trade underwriters. This is limited to a limit of S$100,000 in lifetime assistance per firm.

      Letter of Credit

      Letters of Credit (LC) are widely used in Singapore. It is a banking industry in which a purchaser’s bank ensures that a purchaser’s payment to a vendor will arrive on schedule and in full. The financial institution will be supposed to subsidize the full or leftover cost of the transaction if the purchaser fails to pay the balance. It removes the vendor’s risk of non–a payment on supply and the purchaser’s risk of non–delivery versus payment.

      Assuming your business meets the following criteria, it is eligible if it/the:

      • Has a huge team of 200 workers and a total turnover of S$100 million.
      • Business is established and based in Singapore, i.e. constituted with the ACRA
      • Have at least 30% indigenous ownership

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        Conclusion

        For a trading firm, operating in Singapore is a highly smart option. The treatment is simple, inexpensive, and straightforward. Whenever your Singapore-based business intends to start importing or export of items for business reasons, you must request licenses or permits from the relevant Competent Authorities plus complete the additional procedures outlined.
        It is straightforward and quick to acquire such documents. Furthermore, your business may benefit from a variety of government-sponsored trade initiatives. If you wish to establish your Singapore commercial venture, require help acquiring exporting and importing permissions, or need further help, please feel free to reach out to your ODINT Consulting executive.

        FAQ’s

        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.

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