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The first and the most important step is to understand how SSIC codes are structured. The latest SSIC classification broadly comprises 21 economic activity categories called āsectionsā. Each section is distinguished by a single alphabet. Each section is further broken down into one or more ādivisionsā. A division is further divided into āgroupsā, a group into āclassesā, and each class into āsub-classesā. Here is an example of how the SSIC hierarchy looks:
The way to read an SSIC code is to understand that the first two digits stand for the major business division while each digit that follows further refines the classification of the business activity.
When the digit 0 appears at the end of an SSIC code, it is usually an addition because there is no further classification. So, the SSIC code for āmanufacture of basic iron and steelā is 2410 because it is the only class within the group āmanufacture of basic iron and steelā with the classification code 241.
When 9 appears at the end of your SSIC code, it indicates residual activities that are not significant enough to warrant their own SSIC code. For business activities with SSIC codes ending in 9, the description of the activity ends with the acronym N.E.C, which means ānot elsewhere classifiedā.
The SSIC codes that a business unit needs to select are the Sub-class codes which are most relevant to your businesses primary activity (more on this later). This sub-class codes or SSIC codes as they are commonly known are 5 digit codes and include all the information related to the Section, Division, Group, Class and Sub-class. Now that we understand how the SSIC codes are structured, letās move on to the next step on how to identify one for your business unit.
Economic activity is at the heart of SSIC classifications, and businesses must grasp this to choose the appropriate SSIC code. According to SSIC 2020, "An economic activity occurs when resources such as labour, capital, goods, and services are used in a production process to produce goods and services,". It states that there are 3 kinds of economic activity:
To put this into context, if your primary activity is the retail selling of mobile phones, a secondary activity may be mobile phone repair, while ancillary activities could include everything from human resources and accounting to sales and advertising.
Now that you have understood the definitions, the next step would be to determine your principal activity. As mentioned above, it is determined by identifying which activity provides the most Value Added (VA), and the suggested approach to identify the same is using the top-down method.
The top-down method follows a hierarchical principle to ensure that the classification at the lowest level is consistent with the classification at the highest level. So start by creating a table of hierarchy as shown in the illustration below. Starting from top-level i.e. āSectionā, start plotting which sections does your business operates in. Then move downwards and identify all possible āDivisionsā, āGroupsā, āClassesā & āSub-classesā that your business deals in.
Once this is done, start by identifying the SSIC āSectionā that contributes the highest VA, followed by the āDivisionā and then the āGroupā and so on until the highest VA item within the āSub-classā is obtained. The code of the sub-class that is obtained, is the SSIC code that is most relevant to your business.
Refer to the example provided below. Based on the top-down method, the SSIC code of the economic unit in the example given below is SSIC 27201 āManufacture of primary batteriesā as the VA of SSIC 27 āManufacture of electrical equipmentā is the highest.
If it is difficult to obtain information on VA of the goods sold or services rendered, the principal activity could be determined by other metrics such as:
There are multiple businesses & scenarios that can cause confusion e.g. What if you are the retailer of your own manufactured goods - should your primary activity be manufacturing or retail trade? The SSIC 2020 classification highlights many such cases and provides a clear understanding on how to proceed. There are specific scenarios of economic units not yet in operation, outsourcing, online marketplaces, government activities as well as for repair and maintenance activities.
The SSIC 2020 is the 14th edition of the SSIC and supersedes the previous editions. It is a significant update over the SSIC 2015 (Version 2018) edition.
An SSIC code is a 5 digit number classifying a companyās business activities that it carries out in Singapore. SSIC code helps businesses to identify licence applications, receive government grants and tax incentives, loans and to identify competitors. The SSIC code serves an administrative function such as to analyse economic activity, tax eligibility, industry support schemes etc. Read more about it on our blog: Guide to SSIC codes in Singapore
ACRA allows a company to register a maximum of 2 SSIC codes. The primary code should clearly depict the primary business activity. If you are registering 2 codes, it is advisable that both business activities are coherent.
Yes, SSIC codes can be changed. Companies are constantly evolving and there is a good probability that the primary business activity might change over a period of time. Read more about it on our blog: Guide to SSIC codes in Singapore
To check the SSIC code registered by your company or any other organization, you can visit Bizfile and search teh ACRA register for entities and public accountants.
The acronym ACRA stands for Accounting and Corporate Regulatory Authority. ACRA is a statutory board under the Ministry of Finance of the Government of Singapore. Being a national business registry of Singapore, one of ACRA's functions is to establish and administer a repository of documents and information relating to business entities and public accountants, and to provide access to the public to such documents and information.
It should be emphasised that an economic unitās SSIC code does not depend on the following characteristics:
Be careful to select the most relevant SSIC code as a wrong decision could delay your incorporation process by anywhere from two weeks to two months.