Singapore has long been held in high esteem for having a solid economy, a diverse labor market, and being a prime trading hub in the region.
The World Trade Organization (WTO) deemed the country as the 14th largest exporter in the world, with the trade to domestic product (GPD) ratio topping at 321% in 2020. In the same year, China and the US were Singapore’s two most frequent trading partners, whose merchandise trading performances were S$136.2 billion and S$102.4 billion, respectively.
Not to mention, the city’s banking sector is also highly invested in commodities trading. In 2019, 17% of the city’s gross domestic product consisted in the wholesale trade sector. Ever since then, numerous policies have been additionally implemented to further scale this growth.
So if you’re planning to conduct a trading business in Singapore, this might be the best time to get started. The following article contains a step-by-step guide on how to incorporate a trading company in Singapore.
How to start a trading company in Singapore
Step 1: Form a business entity
It’s imperative that you incorporate your company before conducting any trading activities in Singapore. Think of it as a legal exoskeleton under which your business operates. Every company in Singapore is formed and regulated by the Accounting and Corporate Regulatory Authority (ACRA), the official governing body for corporate formation in this jurisdiction.
Not only will doing so provide you with a strong legal framework under which to operate, but it will also qualify you for trade financing opportunities from banking institutions.
As for the options of corporate vehicles, there are four different types that you can choose from when starting a business in Singapore. The following are ACRA-based business entity types that you can choose from:
- Sole proprietorship
- Limited partnership
- Limited liability partnership.
Although each has its own distinct advantages that would typically fit a certain business type, the current consensus is that a private limited company is the most coveted one among them all.
As the title implies, this is a type of limited liability company that limits the liability of its shareholders or owners to their respective share capital investment.
This means that when debtors and bankers come knocking, the shareholders’ personal assets are off the table. And that the company itself is responsible for paying all the incurred debts or losses.
Other advantages include favorable government grants and corporate taxation.
In turn, this will help bolster your business’s scale and grant you access to higher volume orders from suppliers, which would result in bulk discounts. Alternatively, non-revolving term loans like SME Working Capital Loan and the Temporary Bridging Loan would also be available as quicker alternatives.
Setting up a private limited company can be done online through the Bizfile+ portal, assuming that you’ve already acquired all the necessary documents. After this, you will have to complete the post-registration requirements, which involve getting the corresponding licenses and permits, assigning key personnel, and filing tax obligations.
For a more streamlined process, you can work with a dedicated company incorporation service provider such as BBCIncorp. Even ACRA recommends entrepreneurs take this path to ensure that incorporation goes as smoothly as possible.
Step 2: Register for a Singapore Customs Account
The prerequisite for moving commodities in and out of the country is to first sign up and activate an account with Singapore Customs. Your business entity must specifically state its designation as either an exporter, importer, a common carrier, or others, depending on the nature of your business.
For every application made under the Regulation of Imports and Exports Act (Chapter 272A), you are required to state the Unique Entity Number (UEN). This applies to permits, licenses, certificates, and other documents.
You can activate a Custom Account for free once you’ve acquired a UEN. Note that the time for doing this is typically within the same working day.
Step 3: Custom Permits Application
Depending on your stated classification (export, import, or both) when signing up for your Customs Account, you might need to enlist a declaring agent to apply for the corresponding permit on TradeNet.
All trading companies have to go through a self-assessment test on TradeFIRST (Trade Facilitation & Integrated Risk-based System) to determine their level of facilitation. Note that the assessment is free and is mandated for applicants of governmental schemes or licenses.
In this regard, the following is a quick glance at the typical procedure expected of any importer/exporter
1.Determine the classification of goods
Pertaining to the mentioned fact that you need to apply for the correct permit that matches your intended trading activities, importers will need to apply for an IN permit and exporters an OUT permit. Another thing you need to know is that there are different declaration types for both of these permit types.
Before you begin the application process, ascertain whether your export/import goods are under the categorization of “controlled goods”, “prohibited goods” or “ strategic goods”. If deemed eligible, you will have to submit permit applications to the relevant Controlling Agencies in addition to the IN/OUT permit.
1.1. Controlled goods
The following is a non-exhaustive list of some relevant Controlling Agencies along with their designated controlled goods, prohibited goods, and strategic goods.
Animals, aviation species, and their by-products
Endangered wildlife species
National Park Board
Health Sciences Authority
Arms and explosives
Handguns (toy guns, pistols, and revolvers)
Melee weapons (kris, spears, and swords)
Licensing Division Singapore Police Force
Fruits and vegetables
Fish and seafood products
Meat and meat products
Singapore Food Agency
Ionizing Radiation (IR) irradiating apparatus
Non-Ionizing Radiation (IR) irradiating apparatus (e.g., ultraviolet sunlamps)
Ozone Depleting Substances (ODS)
Other hazardous substances
National Environment Agency
Enterprise Singapore (ESG)
*When you reach Customs clearance, an ICA officer will ask you to produce the import license or authorization from the relevant controlling authority. Failure to comply will result in the confiscation of such items to have them approved by the relevant authority.
Upon such a scenario, you will be given a deposit receipt which you can use for reclaimant after the relevant authority has greenlit your item(s).
1.2. Prohibited goods
Unlike controlled goods, which require an import/export permit or authorization from the relevant governing authority, prohibited goods are banned from being imported into Singapore.
Firecrackers, including tube-sparklers and “pop pop”
Bladed weaponry (flick knife, gravity knife, throwing-knife, wasp knife)
Concealed weapons (shuriken, convertible baton)
Singapore Police Force
Endangered species of wildlife species and their by-products
National Parks Board
Cigarette lighters shaped like pistols or revolver
Arms & Explosives Division, General Licensing Division, Police Licensing & Regulatory Department
1.3. Strategic goods
Any goods that are eligible for military or dual-use (military and non-military use). Singapore has retrospectively made alterations to its strategic goods control list over the years based on various bilateral and multilateral agreements to ensure maximum consistency with international standards.
Some of these include the Wassenaar Arrangement’s Munition List, the European Union’s List of Dual-Use Items, the Nuclear Supplier Group, and the Missile Technology Control Regime. The below table is a quick listing of both military goods and dual-use goods under Division 2 of Parts 1 and 2 of the Schedule to the Strategic Goods (Control) Order. For exportation, transshipment, or transit of this type of goods, you will need a Strategic Goods Control (SGC).
2. Do your tax research
It’s important for importers and exporters alike to be aware of what fees and taxes they’re liable for in order to guarantee smooth operations. Typically, if you’re an importer, Goods and Services Tax (GST) is applicable on non-dutiable goods.
The Singapore government levies a 7% Goods and Services Tax (GST). For taxable goods, the tax is calculated based on CIF values plus all duties other charges.
In non-dutiable cases such as commission or incidental expenses, whether shown will lead to GST being collected simultaneously with those fees charged for duty-free entry into Singapore
In addition, there may also be sales taxes imposed by local authorities which vary depending upon where you live within SGH.
Logically, these goods are still under the provision of Competent Authorities, so check beforehand if they’re categorized as controlled, prohibited, or strategic goods.
Additionally, if your goods are granted duty exemption or qualified under any relief schemes such as the Temporary Import Scheme or Inland Revenue Authority of Singapore (IRAS). Every exported good in Singapore is required to be declared it is Free on Board (FOB) value of the goods in the export permit application.
Overall, trading activities in Singapore promise a wide gamut of benefits, such as ideal access to key trading regions, business-friendly legislation, and first-hand experience of a diverse talent pool.
Source by www.insightssuccess.com