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Despite its small stature, Singapore is strategically located along some of the world’s major trading, shipping and aviation routes. This makes the island nation a favourite destination for export. From international consumer products to manufacturing components, Singapore is truly a champion for global trade.
Along with the high daily volume and traffic, this island nation is also known for strict regulations. Business owners looking to import overseas goods to Singapore should therefore take note of the customs procedures to avoid having to pay unnecessary costs or lengthening the shipping process.
According to the DHL Global Connectedness Index (GCI) 2021 report, a surge in international trade was seen,bolstered by a spike in the growth of digital information flow. Merchandise imports in the country also increased to 19.7%, from S$452.1 billion in 2017 to S$545.9 billion in 2021. They include commodities such as machinery equipment, manufactured goods and food products like seafood.
This comes as no surprise as Singapore has many Free Trade Agreements with other countries such as New Zealand and China. The pro-business tax approach has made international trading extremely efficient for businesses looking to import goods into Singapore.
However, all imported goods must be supported with a customs permit and are subject to specified duties or payments, such as Goods and Services Tax (GST). Here, we discuss the entire process and what you can expect when shipping into Singapore.
You will first need to determine if tax or duty payments are required for your goods. Dutiable goods, which incur both, are:
All other goods, such as approved fruits and vegetables, finished consumer products or electronics, incur GST only. As an importer, it is important to identify which category your goods fall under when it comes to shipping into Singapore.
Before the goods are shipped into the country, importers must obtain a customs permit, which is an import license of sorts. You can do so by registering with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore, or an issuance agency to obtain a Unique Entity Number (UEN), with which you can activate your Customs Account..
Once activated, you can either appoint a Declaring Agent, such as DHL Express, to obtain the customs permit on your behalf, or do so on your own. All permit applications must be submitted via TradeNet.
During the import process, importers are required to furnish the customs permit and other supporting documents as requested, such as invoices or airway bills.
There are three types of import duties and taxes – GST, customs duty and excise duty.
In February 2022, the Singapore government announced that the GST rate will be raised from 7% to 9% by 2024. This will occur in two stages, with a one-percentage point increase each time on 1 January 2023 and 1 January 2024. Both domestic purchases and imported goods will be subject to this tax.
GST is currently levied on goods that are valued at S$400 and more. However, it was also announced that low-value imported goods below this threshold will also be subject to this tax payment from January 2023 onwards.
The GST on imported goods to Singapore is devised from a good’s CIF (Cost, Insurance and Freight) value, which may include any incidental costs as well. For example, a pair of S$100 boots may require an additional S$40 for shipping, packaging and handling. The final dutiable value would then be S$140. Based on the current 7% GST rate, the GST payable would be S$11.2.
Apart from GST, some imported goods may also be subjected to customs and/or excise duties. These payments are imposed on dutiable goods from specific categories – such as beverages with high alcoholic strength. Whereas, excise duty is duty levied on goods manufactured in, or imported into, Singapore.
These excise duty fees are calculated based on assessed value of goods or specific rates, whereby such goods are taxed according to a percentage of the total shipment value or specified amount per unit of weight or other quantity.
It is an offence to bring in prohibited or controlled items into Singapore, and offenders can be charged with fines or even a jail term.
Some examples of prohibited items are chewing gum, firearms, endangered wildlife and electronic tobacco devices such as e-cigarettes. Controlled goods, on the other hand, must undergo a proper authorisation process before they are imported into Singapore.
Whether you are importing food products into Singapore for personal consumption, or are considering to import products for your business needs, knowing the customs restrictions and different types of import tax will benefit you in the long run. Even though Singapore operates a free port, importing alcohol into Singapore without a valid permit can get you into trouble with the local authorities.
With online shopping becoming one of the most popular activities around the world, a robust export strategy would be a good area of focus for traders hoping to increase their presence in the Southeast Asia market. Working with a reliable logistics provider like DHL Express can help you move away from some of the challenges when it comes to customs clearance. For example, we provide customs support services in Singapore to help you with the customs clearance process and protect your shipment throughout the way. Apply for a business account with DHL Express as we help your business effectively navigate through international customs complexities.