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Starting a Trading Business in Singapore

General Basics of Starting a Trading Business
Trading, as it is popularly known, is the business of matching buyers and sellers. You call it International trading when you deal with people from different countries. Basically, international trading is acting as a middleman between the two entities located in different countries.

International trade is one of the hot industries of the new millennium. As the world is transforming into a one-world global community with advancements in technology and fewer and fewer trade barriers,  international trading opportunities are becoming more and more accessible and rewarding.

Related Topic: Details of incorporating a Singapore company

Good news is that trading business these days is not the sole purview of the big boys, they make up only about 4 percent of all import/exporter business. Which means that the other 96 percent of trading businesses is done by small-to-mid size enterprises.

One of the good things about a trading business is that its startup costs are comparatively low. Unless you're starting as a distributor, you can get away with purchasing no inventory. Your major financial outlay will go toward office equipment and market research expenses--and if you're like many modern traders, you already have the most expensive piece of office equipment - a computer system!

Your basic necessities will be a computer, printer, fax machine and modem. If you already have these items, then you're off and running.

As an international trader, your mission is sales--in two different but overlapping fields:

• selling yourself and your company to clients as an import/export manager for their products, and

• selling the products themselves to representatives and distributors.

Success in one of these arenas will contribute to your success in another. Once you've established a favorable sales record with one client's goods, you'll have a track record with which to attract more clients. And, of course, each success will contribute to your own self-confidence, which will, in turn, will increase your confidence during negotiations with new prospects.

Trading Business in Singapore
With the exception of few Singapore sectors (such as broadcasting, news media, legal services, some financial and banking services, trade in tobacco products and residential property), Singapore has very few trade barriers. Singapore maintains its position as one of the most liberal trading regimes in the world.

Singapore's safe, pro-business environment is supported by a well-respected government with transparent and consistent policies that protect companies' physical and IP investments. Global business magazine Forbes has ranked Singapore as the second best place in the world to start a business.

Singapore Tariffs
In general, Singapore is a free port and an open economy. More than 99% of all imports into Singapore enter the country duty-free. The only exceptions are heavy tariffs on the import of motor vehicles, liquor, petrol, and cigarettes / tobacco products.

Singapore charges Goods and Services Tax (GST) on the supply and import of goods and services in Singapore. Current GST rate is 5%. GST is a multi-stage tax and is collected at every stage of the production and distribution chain. A registered trader/company will be able to claim credits from the Comptroller for GST paid on goods or services imported and used within the production chain.

When a Singapore company/agent imports goods on behalf of an overseas non-taxable person who has no business establishment in Singapore, the Singapore company will be treated as the principal importing the goods, irrespective of whether the Singapore company calls itself an agent or not. The Singapore company must pay GST Input Tax to Customs Department.

All imported goods (whether for domestic sale or re-exports), are taxable unless the goods are specifically given GST relief by the Comptroller of GST. If the goods are kept in the Free Trade Zones they are not treated as imports; GST is not charged until the goods leave the Free Trade Zones (FTZ) for sale in Singapore (re-exported goods from the FTZ are exempt from GST).

Outside the FTZ, when goods are imported, GST (Input Tax) must be paid to the Customs and Excise Department at the point of importation, irrespective of whether the importer is a trader or a final consumer.

Singapore Customs
Traders are required to ensure that the declared values of goods for customs purposes are correct. If the goods have been undervalued, the Customs and Excise Department will increase the values declared. Severe penalties may be imposed on traders attempting to evade duty.

Cost, insurance, freight, handling charges and all other charges incidental to the sale and delivery of the goods are taken into account when duty is assessed.

License Requirements in Singapore
Most goods in Singapore can be imported freely without licenses.

Generally, the import of goods which the Singapore government considers pose a threat to health, security, safety and social decency are controlled. For example, licenses are required for pharmaceuticals, hazardous chemicals, films and videos, arms and ammunition. Companies exporting controlled items to Singapore must apply for licenses from the appropriate government agencies.

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