In a nation as small as Singapore, where the natural resources needed to become self-sufficient are lacking, trade has become the backbone of the country that keeps the local economy running up until today.
According to the latest statistics from the World Trade Organisation (WTO), Singapore is the 14th largest merchandise exporter in the world and has a trade to GDP ratio of 404.9.
With its strategic location in the heart of Southeast Asia, Singapore continues to provide a gateway to the regional ASEAN market, making it attractive to investors and potential entrepreneurs.
If you wish to establish a trading company in Singapore, this article will help you understand all you need to know about the incorporation process.
A trading company is essentially a business entity that is set up for the sole purpose of importing and exporting business. These companies may specialise in a specific range of products, maintain a stock or a shop, and deliver products to customers. Since the nature of operations is rather unique in comparison to regular business structures, trading companies need to comply with specific regulations issued by the Singapore Customs.
Here’s a step-by-step breakdown to guide you through the process.
In order to start a trading company in Singapore, you have to register your business under the Accounting and Corporate Regulatory Authority (ACRA) through BizFile, its online filing and information retrieval system. Since the entire process is computerised, company incorporation can be completed as early as two days after the application has been submitted.
Once the trading company has been registered under ACRA, the next step would be to register with Singapore Customs. Before being granted permission to import/export goods into and out of Singapore, both importers and exporters need to activate their account with Customs as an indication of an operating business entity. Once registration is deemed successful, a letter of approval will be issued and will be valid for as long as the trading company exists in Singapore.
For all imported and exported goods, including all controlled and non-controlled items, the import of all goods into Singapore requires an IN Permit through TradeNet. In the same way, the export of all goods out of Singapore requires you to obtain an OUT Permit as well. Since permit applications can only be submitted through Declaring Agents, you may want to appoint a Declaring Agent to apply on your behalf for a minimal service fee.
In order to make payments for any fees or taxes you may incur during the course of your trading activity, maintaining an inter-bank GIRO is necessary. This process can be done with any local bank and typically takes three to four weeks for the bank’s approval. Upon approval, you will receive an email or fax notification.
For all trading companies in Singapore, there is a need for security lodgement if your business activities and transactions include the following:
For revenue protection and regulatory compliance, Customs may vary the security lodgement amount on a case-by-case basis.
For every permit approved by Customs, they are issued with a validity period. Trading company owners need to regularly check the validity of the permit presented for goods clearance.
For imports of containerised cargo by sea: The printed copy of the customs permit along with the supporting documents is not required at the entry points of Singapore.
For import of containerised cargo by air or land: Companies are required to present the permit and supporting documents such as invoice, packing list and Bill of Lading/Air Waybill, for verification to the checkpoint officers.
For imports/exports of containerised cargo: The shipper seal and container number are both required when applying for a permit.
For exports of containerised cargo: You will need to produce the cargo with the approved Customs export permit and supporting documents, along with the permit number at the point of cargo lodgement to the checkpoint officers for verification purposes.
Compared to business entities such as Sole Proprietorships and Limited Liability Companies (LLCs), the incorporation process for trading companies can be more tedious, considering the additional requirements needed. Moreover, there are some documents that can only be submitted through certified agents or firms. When in doubt, it is always a viable option to engage with external firms to assist you during incorporation. Fortunately, there are multiple avenues for you to do this.
Through the Aspire and Osome partnership, entrepreneurs looking to start their business in Singapore can set up a trading company in just a matter of minutes. This partnership incorporates your business for you and even sets up a business bank account for your company at the same time.
To learn more about the incorporation, click here.