The government has streamlined the procedure of forming a corporation in Singapore in order to attract entrepreneurs to come and invest. Singapore’s policies, which include tax breaks and a lack of bureaucratic red tape, have earned it the second highest position in the “Ease of Doing Business” category, placing it among the world’s most appealing countries for investors.

Why set up an import/export business in Singapore?

By signing the Asian Free Trade Area (AFTA in the context of ASEAN), the Trans-Pacific Partnership (TPP) and several bilateral agreements such as the European Union-Singapore Free Trade Agreement, Singapore has chosen to promote exports while minimizing barriers to imports.

First, Singapore is poised to replace Hong Kong as a regional hub around Fin tech and logistics. Its exceptional maritime location has participated́ in its economic rise, and it is now the second largest port in the world in terms of exports and maritime traffic (after Shanghai).

Secondly, the public authorities support innovation and entrepreneurship with large subsidies of up to 50% of the investments made, and this without any counterparts. On average, 60% of the investments are made by international funds and 75% of the funding invested by funds in ASEAN is in Singapore.

Moreover, opening an import/export business in Singapore is relatively fast and simple: on average, a period of two to three days is enough to open a legal entity in Singapore and this one can be constituted by a symbolic share capital of 1SGD.

Finally, the Singaporean government grants very interesting fiscal, social and legal advantages:

1. Companies making less than SGD 100,000 in profits during the first three years are exempt from tax;

2. Singapore’s corporate tax rate is capped at 17%, making it an excellent choice for companies concerned about rising tax rates as they increase. However, because of the tax benefits, exemptions and rebates available to Singaporean companies, the effective tax rate for most companies is 8-9% ;

3. Dividends are also distributed to shareholders tax-free, making investors more likely to invest their money.

How to create an import/export business in Singapore?

To set up an import/export business in Singapore, it is necessary to respect a certain number of obligatory steps:

1. Choose the structure of your import/export business:

Indeed, the type of company will vary according to your needs:

1.  “Representative Office” (RO): The representative office in Singapore, is a simple but temporary structure (1 to 3 years) limited in its actions and without legal capacity. The sole purpose of the RO is to research and study the market in Singapore and Southeast Asia, and validate the viability of establishing a permanent business entity.

2.Private Limited (Pte Ltd): an independent and permanent legal entity with limited liability of the partners. This legal form allows you to develop your business activities in the region in a sustainable way. It is the most common form of company for the creation of a start-up because it can include only one shareholder and foreign ownership is not limited.

3. “Branch“: the foreign head office controls the company and is in charge of it. The branch must offer and develop the same activities as the headquarters.

4.Sole Proprietorship: a sole proprietorship, simple to set up and less costly to manage, compared to a company. Registration must be done annually and the business is not a separate legal entity from the owner who is personally liable for all debts and losses of the entity.

2. Registering your import/export business with ACRA:

ACRA (Accounting and Corporate Regulatory Authority) is the registry for companies in Singapore. When you want to set up your import/export business in Singapore you need to go through the BizFile+ portal and start the online process. This portal will remind you that it is necessary to comply with the legislative provisions laid down by the ACRA and the Inland Revenue Authority of Singapore (IRAS) such as

1. Benefiting from an EntrePass: The EntrePass allows eligible foreigners to start and operate a new business in Singapore. It can be obtained by starting a business in Singapore provided you are an entrepreneur, innovator, or investor. To qualify under any of these three categories, one must:

➤ Be supported by an officially recognized incubator
➤ Or have intellectual property
➤ Or have done outstanding work in their field of expertise

2. Businesses such as cafes, supermarkets, bars, nightclubs, massage parlors, etc. will not be eligible for an EntrePass.

➤ Have a company name approved by ACRA
➤ Have a minimum of 1 shareholder
➤ Have at least one Singapore citizen or resident director (To meet this legal requirement, it is possible to appoint a nominee without decision making powers)
➤ Have a Singapore resident secretary general
➤ Have a share capital of at least one Singapore dollar
➤ Have a physical address
➤ Have purchased a Business Profile from ACRA

Foreigners must use an incorporation service for this registration as they cannot register an import/export business in Singapore themselves.
Ultimately, the registration documents are signed by the subscribers, then the incorporation (Articles of Association) is automatically generated and finally the BizFile (Kbis) is issued.

Import/Export business in Singapore

3. Making a customs declaration:

First, it is mandatory to activate your commercial account with Singapore Customs before your import/export business can export or import goods to or from Singapore. All you need to do is submit an application on the Singapore Customs account portal and provide the company’s registration number and primary and secondary contact details.
Generally, the account activation processing takes 1-2 business days after you submit your application.
Finally, once your business has been successfully incorporated, you will receive an approval letter, valid until the business is activated.

4. Apply for permits and licenses:

The nature of the goods you wish to import or export determines the regulations you must follow. Check to see if you need permits or licenses for controlled goods such as drugs and food products:

1. Import/export of any goods: If your company plans to import all goods, including non-controlled and controlled items, it is mandatory to:

➤ Acquire an IN permit
➤ To acquire an exit permit to export all goods out of the country
➤Some special cases, such as the export or import of commercial samples of several uncontrolled goods whose total value does not exceed S$400, can be exported or imported without a permit

2. Import/export of controlled goods: These activities are subject to regulation by the control agencies and in most cases, you are required to obtain an exit or entry permit before proceeding. Controlled goods that are often imported or exported to Singapore include:

➤ Food and animal products
➤ Petrochemicals
➤Tobacco products and cigarettes

3. Importing high-tech products: Some high-tech devices are normally subject to export regulations through the export zone and the Singaporean importer may be required to provide verification of delivery and an import certificate by the exporter. You can apply for these approvals from Singapore Customs. Devices covered by these regulations must be imported directly into the country rather than being diverted to others. For example, if you intend to be in the strategic goods business (military/mass destruction), apply for a permit through the TradeNet system.

4. Exporting local goods: If you are exporting local goods, some buyers may require a certificate of origin that proves the goods are made in Singapore. There are two types of certificates of origin:

➤ Ordinary Certificate: to prove to buyers that the exported goods are wholly manufactured, produced or obtained in Singapore
➤ Preferential Certificate: to enable buyers to obtain special discounts on taxes or tariffs.

5. Prepare documents for customs clearance:

Once you have obtained the necessary licenses, the final step is the clearance of the goods through customs. The appropriate documentation must be presented at a port of entry (a printed copy of the approved customs permit). Documentation may include the invoice, packing list and bill of lading or air waybill.
In addition, these documents must be retained for five years from the date of approval of the customs permit, in physical or digital form.

How to transit your goods in Singapore?

When your company is specialized in import/export, it appears natural that some goods transit through Singapore. Several cases appear:

First, if you want to export your goods from Singapore, you will have to declare this export in customs.

Secondly, if your goods are transiting through Singapore, your company must first be registered with ACRA as a shipping agent, air cargo agent or freight forwarder. In addition, you need a transshipment permit. After activating your customs account, register as a reporting and transshipment agent. Apply for a transshipment permit from Customs and prepare the documents for the clearance of the goods.

Finally, if your goods are not transiting through Singapore and you intend to trade overseas or transit goods through the territory of another country, your activities will be governed by the laws of that particular country. The country in question may require you to do the company registration with its authorities.

Start your import/export business in Singapore

310 client reviews (4.8/5) ⭐⭐⭐⭐⭐

Register your company

Where to store your goods in Singapore?

You store imported goods or goods to be exported in licensed, zero-tax or FTZ warehouses.

First, you can opt for free zone warehouses which are premises located in zones (FTZ) where companies can import, sell or export goods free of customs duty, excise or GST. All goods, including those subject to duty, may be stored in FTZs, with the exception of alcohol and cigarettes. However, goods arriving by rail or road cannot be deposited in FTZs and are subject to duties and taxes.

Secondly, you can choose Zero GST warehouses which will allow you to store only non-taxable goods for an indefinite period of time in a designated area approved by Singapore Customs, with the GST suspended.

Finally, you can opt for Licensed Warehouses which will allow you to store only dutiable goods, namely liquor, tobacco, motor vehicles and petroleum. The non-designated areas of the same storage facilities can be used to store other goods such as duty-free goods.

How to pay customs duties and taxes on services and goods in Singapore?

1. Open an interbank GIRO account:

Before paying duties, taxes, fees and other charges for services provided by Singapore Customs, you must open and maintain an Interbank GIRO (IBG) account. An IBG account allows you to make payments directly from your bank account to Singapore Customs. The IBG application is submitted to the Customs Department. Again, your business service provider can provide this service.

2. Paying duties and customs:

Several goods imported or manufactured in Singapore are subject to duty and customs. These include tobacco products, intoxicating beverages, petroleum products and motor vehicles.
Duties are levied at a specific rate or on an ad valorem basis, which is the percentage of the customs value.
However, duties may be temporarily suspended under various customs regimes.

3. Paying taxes on services and goods:

Significant goods in Singapore will be subject to a 7% goods tax if they are intended for local consumption. This tax is administered by the Singapore Inland Revenue Authority and collected by Customs.
It applies to all non-deductible and deductible goods that are paid on an ad valorem basis.
In addition, the tax is essentially calculated on the basis of freight, insurance and costs, as well as all other chargeable duties and costs.
However, this amount may be temporarily suspended under various customs regimes.

How to financially develop your import/export business in Singapore?

To develop your company in Singapore, you can choose to take loans. Most banks in the country take into account the importance of the import/export business sector and offer competitive financing services.
In fact, here are some financing options you can take advantage of:

1. Factoring loans: Many factoring agents, such as financial institutions and banks, offer instant payments against unpaid invoices. A fee of no more than 15% is charged for collecting payments from customers.

2. Overdraft: You may overdraw your current account up to a maximum amount agreed upon with the bank. Interest is paid only on the amount of the overdraft.

3. Transactional loans: granted to finance confirmed orders that are subject to the creditworthiness of the company placing the orders.

4. Term loans: granted when companies provide collateral, subject to approval by the issuing bank.

5. SME micro-loan: government-assisted financing program for local SMEs. Up to $100,000 in financing is available for businesses with annual revenues of less than $1 million or fewer than 10 employees.

6. Working Capital Loan for SMEs: a government-assisted financing program launched by Spring Singapore in June 2016. Up to $300,000 in funding is available for SMEs in Singapore.

Letter of Credit: a banking service where a buyer’s bank guarantees that the buyer’s payment to a seller will be received on time and for the right amount. If the buyer is unable to make a payment, the bank will have to cover the full or remaining amount of the purchase. This eliminates the risk of non-payment against delivery for the seller and the risk of non-delivery against payment for the buyer.

Launch your import/export business in Singapore

310 client reviews (4.8/5) ⭐⭐⭐⭐⭐

Ask an expert