Complete Guide to Set up Trading Company in Singapore

Singapore is one of the best locations to establish a business for foreign individuals. Furthermore, due to its strategically placed geographic location, Singapore has acquired the title of ‘port of call’ for traders all over the world.

More than 3000 local logistics and international and supply chain management entities are operating in Singapore. Singapore offers a number of shippers an option of more than 200 shipping lines connected with 600 ports across 120 countries. Managing ports such as container load transfers and unloading, consisting of a larger number of professional personnel and state-of-the-art equipment and technology.

However, Changi Airport, the award-winning Airport of Singapore, provides a 24-hour one-stop service center for airlines, shippers, cargo agents, and consignees. In short, for traders, it is one of the prominent destinations to establish a trading company.

If you wish to Set up a Trading Company in Singapore, this comprehensive guide will give you a quick start. Here you will get familiar with all the incorporating Singapore trading company-related details. You will also learn about the complete registration process with necessary permits and licenses for a Singapore trading company.

What is a Trading Company?

A trading company is defined as a legal entity that deals in import and export business. You are dealing in import and export business if you wish to:-

• Export goods Singapore from foreign markets
• Importing goods into Singapore from foreign markets for local consumption or re-exporting

Trading Company needs to fulfil certain regulations set by the Singapore customs. Let us move further and discuss the benefits of establishing a trading company in Singapore.

How to set up a Trading Company in Singapore?

Once you have decided to open a trading company in Singapore and wish to enjoy all the above-given benefits, then follow the procedure as below:

Step 1: Incorporate the company

The process of establishing a trading company in Singapore is the same as registering any other company in Singapore. However, there are a total of five different types of companies to choose from. A Private Limited company is one of the most common and flexible companies chosen by most foreign individuals and can be registered in Singapore.

ACRA: The Accounting and Corporate Regulatory Authority of Singapore (ACRA) is defined as the national regulator of companies and public accountants, making it compulsory for all the Company regulating in Singapore to be registered as per the Singapore companies act and should follow all its specified rules and regulations.

You can use the Singapore standard industrial classification for 2015 to choose the type of trading business operation your company will be dealing in. However, all the primary and secondary business operations should be properly mentioned during the time of the company incorporation. Here are the key requirements to incorporate the company in Singapore are:

• Your Company must have a minimum of one shareholder, either individuals or the corporate entity.
• Your Company must have at least one resident director who should be either a permanent resident, employment pass holder, dependent pass holder, Singapore citizen.
• Your Company must appoint at least one resident Company secretary.
• Your Company must have initial paid-up share capital of a minimum of S$1
• Your Company must have a registered Singapore office address.

If the number of shareholders in the company is 20 or less, having no company holding beneficial interest in the company’s shares is commonly known as an exempt private company. If the company’s shareholders are more than 20 and less than 50, then it is commonly known as a private company. However, if the number of shareholders is more than 50, then it turns into a public Company.

Once your company is successfully registered, Accounting and Corporate Regulatory Authority (ACRA) sends you the email confirming the company registration in Singapore. The email provided to you will include the unique entity number (UEN) of the Company, also known as a standard identification number, which the Singapore government generally provides to every registered business entity in Singapore.

Step 2: Activate a Singapore Customs Account

The next step involved in establishing a trading company in Singapore is to register your company with Singapore customs.

Any company that engages in business activities like import, transshipment, or export activities in Singapore needs to register with Singapore customs either as an exporter, importer, common carrier, or others.

According to the regulation of the import and export act, you are required to include the unique entity number of the Company in every application, be it for a permit, certificate, license, or other documents.

All the companies having valid unique entity numbers and can activate their customs Account for free, and it normally gets processed within the same day.

Step 3: Apply for Customs Permits

Once you have successfully activated your customer’s account, you will require to hire a declaring agent to apply for the Customs permit (either export, import, or both) through Tradenet on your behalf. However, the application for the permit can be registered to the Tradenet front-end solution purchased from the certified solution providers or government front-end application. For every permit application, you will require to pay $2.88. Basically, while submitting the permit application, you will require to keep the relevant support associated with the import, purchase, sale, or exports of the goods for five years following the date of approval of the Customs permit.

TradeFIRST

TradeFIRST stands for Trade Facilitation & Integrated Risk-based System. It is defined as the integrated assessment framework that gives you the company’s holistic assessment and regulates the level of facilitation concede. This assessment is free of cost, and the Singapore government has made it mandatory for all these business entities that are willing to apply for the Singapore customs scheme or license.

Only for Importers

The is only for importers. If you are importing goods from overseas, the government will now need to inspect your goods before they can enter Singapore.

Duties and GST for importing goods

If you wish to import goods into Singapore, then you will require to submit a declaration to Singapore customs. Goods and service tax is only payable on non-dutiable goods. However, if goods are imported from outside Singapore for use locally, then both GST and customs duty are payable on dutiable goods in such a situation.

Always remember that in Singapore, import means bringing goods into the customs territory from the entry point or a free trade zone, or from overseas countries the goods brought into the free trade zone for the purpose of storage or pending re-exporting.

Do remember to check that the goods you wish to import are controlled goods or goods addressed to the restrictions by competent Authorities (CAs) in Singapore. You can identify the goods by searching its Competent Authorities product code, description of the goods, or Harmonized System (HS) code.

If the designated good is subject to control, then the name of the competent authorities (CAs) will be specified next to Harmonized System (HS) code. However, the other option you can use to identify the product is by checking directly by visiting their respective CAs on their licensing requirements. If you seek advice on each product’s full eight-digit Harmonized System (HS) code, you can apply for the officer classification at a fee of $75 for each product.

However, customs duty or GST payment must be made as soon as goods enter Singapore until goods remain inside an FTZ. However, also bear in mind, when the designated goods are transferred from an FTZ or entry point into the customs license premises (including zero-GST warehouses or licensed warehouses), in such a situation, the customs duty or payment of GST will be suspended till the goods are stored in the licensed premises.

In addition to this, you do not need to pay the customs duty or GST for the goods that provide duty exemption or GST relief or for those goods that are imported according to the temporary imports Temporary Import Scheme under Singapore Customs or the relevant Inland Revenue Authority of Singapore (IRAS) schemes which includes:

• Major Exporter Scheme (MES)
• Approved Import GST Suspension Scheme (AISS)
• Import GST Deferment Scheme (IGDS)

Only for Exporters
If you intend to export goods to foreign countries from Singapore, then in such a case, you will require to declare the goods to Singapore customs. Also remember, that GST and duty are not charged for the goods exported from Singapore.

However, the goods that are exported from Singapore are regulated as per the regulation of import and export, Strategic Goods (Control) Act, Customs Act and several other legislation that comes under the relevant Competent Authorities (CAs).

Just like the importing procedure, in exports also you are required to check if the intended goods you are looking to export from Singapore are controlled goods subjected to the restrictions by competent authorities in Singapore.

An exporter in Singapore is required to mention the free on board value of goods in the relevant export permit application. The customs export permit is needed for the following situations:

• When exporting the locally manufactured goods or local GST paid goods
• When exporting the dutiable goods from the certified warehouse
• You will require the permit when re-exporting the imported goods under the Temporary Import Scheme.
• When exporting the goods from Free Trade Zone (FTZ)
• When you wish to temporary export of the goods that are intended to be re-imported
• When you wish to export non-dutiable goods from the zero-GST warehouse and goods as per the major exporter Scheme.
• Also, remember that the strategic goods export permit is also needed for the export of goods controlled under the Strategic Goods (Control) Act.

Certificates of Origin
Another important thing that you need to consider if you are an exporter (i.e., selling goods outside Singapore) is a certificate of origin clause. A certificate of origin allows you to verify the actual origin of the goods. There are basically two types of certificate of origin; the first is an ordinary certificate of origin (also known as a non-preferential certificate of origin) and the second is a preferential certificate of origin.

The ordinary certificate of origin is provided by the Singapore custom or any certified groups like the Singapore Chinese chamber of commerce and industry and Singapore manufacturing Federation. These are two organizations that provide the ordinary certificate of origin mainly for the locally manufactured or provided goods and the goods from several foreign countries that are re-exported from Singapore. Additionally, these organizations do not provide the certificate of origin for the exports of Singapore origin textiles and textile goods to the USA.

A preferential certificate of origin grants your customer to pay the lower or no customs duty while exporting goods as per the Free Trade Agreement or Scheme of Preferences. As these goods are only issued by Singapore customs. However, continuous issuing of the preferential certificate of origin for re-exporting the goods from Singapore on the basis of a preferential certificate of origin is only issued for the first exporting party. The goods that are being imported to Singapore are required to follow all the mentioned conditions to get issued.

By following the below-given points, you can obtain the certificate of origin:

• Register your manufacturing premises
• Submit the manufacturing cost statement
• Apply for CO via Tradenet
• Collect the CO

Step 4: Applying for Inter-Bank GIRO

Another essential thing that you need to consider in the process of setting up a trading company in Singapore is you need to properly maintain the Inter-Bank GIRO (IBG) account with Singapore customs to ease the payment of Goods and Services Tax (GST), payment of duties and several payments to the customs directly. The application for Inter-Bank GIRO usually takes up to 3 to 4 weeks to get approved by the bank. After the application is approved, you will be informed via fax or email based on the contact details mentioned in your Customs Account.

Step 5: Security Lodgment requirement by Singapore Customs

Always bear in mind that a trading company in Singapore needs to provide the security of the entity dealing in the transaction, including temporary import of goods for approving purposes, dutiable goods, or regulation of licensed premises including licensed excise factories and warehouses. The Singapore customs may differ the security lodgment amount based on the case by case assessment which might also be for revenue protection purposes and regulatory compliance requirements.

Step 6: Procedure for clearance of goods

Those permits that are issued have a separate validity period. However, you should also make sure about the permit’s validity period that was presented during the time of the goods clearance. For the export and import of containerized cargo, the shipper and container number are needed during registering for the permit.

When importing this containerized cargo through the sea, you do not require to present any printed copy of the customs permit and relevant supporting documents to the officers present at the entry points. In comparison, for the import of containerized cargo via air or land, you are required to present the relevant permits and supporting documents like a packing list, invoice and bill of lading or Air Waybill to the officer for verification.

For the exporting of the containerized cargo, you must present the cargo along with the verified Customs export permit and relevant supporting documents, including Bill of Lading/Airway Bill, packing list, invoice to the office at the entry point only if it is mentioned in the permit terms and conditions or in case the cargo is dutiable or controlled. However, always make sure to have the permit number at the cargo point lodgment for verification purposes.

Step 7: Letter of Credit

A letter of credit is defined as the most used method of payment among all the buyers and sellers. The buyer’s bank provides and letter of credit to the seller. The LC provides the guarantee about the payment to the exporter from the buyer’s bank.

By choosing a letter of credit, you can eliminate the following risk:

• When exporters do not provide the goods even after receiving the payment
• When buyers do not pay for the goods even when the goods are delivered.

Benefits of Setting up a Trading Company in Singapore

There are many benefits to setting up a trading company in Singapore. The following are a few:

• Strategic location and excellent infrastructure: Singapore is deliberately situated and offers the pathway to the regional Association of Southeast Asian Nations (ASEAN). Setting up a trading company in Singapore grants you to click on the Singapore trade links at the same time getting the advantage of its great infrastructure, which can also serve for carrying goods for import and export. However, the Changi airport is considered one of the award-winning airports and the Port of Singapore is known as the second busiest port all over the world.
• Clear and transparent regulatory framework: Another benefit of establishing a trading company in Singapore is that Singapore is one of the countries with the lowest crime rates and corruption across the world. As a result, several businessmen enjoy the benefit of a clear and transparent regulatory framework.
• Very low barriers to establishing a trading company: An individual can quickly register the trading company in Singapore as its process is very straightforward, and you also have the privilege to complete its process online. This means for registering a trading company you do not have to run behind several offices and centers. Moreover, the minimum requirement for capital to establish a trading company in Singapore is only S$1. Besides this, Company is also getting the benefit of highly attractive corporate taxes in Singapore.
• Singapore is considered the global financial hub of owning more than 500 financial institutions. For commodities traded all over Asia, Singapore offers more than 25% of the trade finance.
• As compared to several other Asian trades, Singapore conducts more than 30% of all trades.
• Consisting of more than 80 comprehensive DTAs (to avoid the double taxation agreement), Singapore trading companies can prevent themselves from paying tax twice.
• Singapore is ranked number one in Asia and fifth in the world in terms of the logistic performance index of the World Bank.

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