Over the last decades, Singapore has been an important hub for those traders which are dealing between the western and the eastern areas. With more than 3000 local and international supply chain and logistics businesses in the country, it is undoubtedly one of the largest merchandisers in the world. In addition, the country has built a lot of infrastructures like harbors, airports, shipping lines, or roads, to improve the efficiency of the whole system. This guide will show you essential steps and information on how to start an import-export business in Singapore.
Incorporate and register the company
Just like other areas, you first need to register your import-export company with the Accounting and Corporate Regulatory Authority. After that, it is compulsory to activate your business account with the Customs of Singapore before your company would export or import goods out or into Singapore. In general, it often takes from 1 to 2 working days to process the account activation after your application is submitted.
Once your business has been successfully incorporated, you will acquire an approval letter which can be valid until your business exists.
Apply for permits and license
- Import or export all goods: If your business plans to import all goods, including non-controlled and controlled items, it is compulsory to acquire an IN Permit. Similarly, an OUT Permit is required to export all goods out of the country. Some special cases such as exporting or importing trade samples of several uncontrolled goods with the total value no more than S$400 might be exported or imported without permits.
- Import or export controlled goods: Some common controlled goods that are often imported or exported in Singapore include food and animal products, petrochemicals, drugs, tobacco products and cigarettes. These activities are subject to the regulations of the Controlling Agencies. In most cases, you have to acquire an OUT or IN Permit before proceeding.
- Import high-technology items: A few high-technology devices are basically subject to exporting regulation by the exporting area and the Singaporean importer might be required to provide a Delivery Verification and Certificate of Import by the exporter. You could apply for these permits from the Singapore Customs. Devices covered by these regulations should be directly imported into the country rather than being diverted to others.
- Export local goods: If you export local goods, some purchasers might ask for a Certificate of Origin which proves that the goods are manufactured in Singapore. There are two types of Certificates of Origin: 1) Ordinary: to satisfy the purchasers that the exported goods are entirely manufactured, produced, or obtained in Singapore and 2) Preferential: to allow purchasers to get special claims on taxes or tariff.
Exercise duty and customs
Several goods imported or manufactured in Singapore are subject to exercise duties and customs. These include tobacco products, intoxicating liquors, petroleum products, and motor vehicles. Duties will be levied on a specific rate or an ad valorem basis, which is the percentage of the customs value. Duties might be suspended temporarily under different Customs schemes.
Services and goods tax
Important goods in Singapore will be charged a goods tax at 7 percent if they are going to be used for local consumption. This tax is administered by the Singapore Inland Revenue Authority and collected by Customs. It is on all non-dutiable and dutiable goods which are paid on the ad valorem basis. The tax is basically calculated from the freight, insurance, and costs, along with all other duties and chargeable costs.
This amount could be suspended temporarily under different customs schemes.
Import and export loans
If you have a tight budget, do not worry because most banks in the country take cognizance of the significant import and export industry and provide competitive financing services. Some financing options that you can benefit are:
- Factoring loans: Many factoring agents such as financial institutions and banks offer instant payments against outstanding invoices. A fee of no more than 15% will be charged for gathering the payments from the clients.
- Overdraft: You could overdraw the current account to an agreed maximum amount with the bank. The interest is only paid on what you overdraw.
- Transaction loans: This type of loan is provided to finance confirmed orders that are subject to the creditworthiness of the business placing the orders.
- Term loans: These loans are provided when companies provide collateral subjects to approval by the issuing bank.