Customs Procedures in Singapore

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Every time a company purchases an imported product it must fulfill with the regulations established by the Customs Regime of that country, in this sense we will talk about the customs procedures in Singapore in this article.

Firstly, it is important to know that Singapore does not belong to any customs union. Rather, it’s a member of the Asia-Pacific Economic Cooperation Forum (APEC) and applies the Harmonized Customs System.

According to the World Trade Organization, it is defined as the nomenclature based on a classification of goods according to a 6-digit code system accepted by all participating countries. They may establish their own sub-classifications with more than 6 digits for tariff or other purposes.

It consists on a six-digit combination that identifies the products based on their characteristics.

More than 200 countries and 98% of global trade use this product nomenclature system known as the Harmonized System which is regulated by the World Customs Organization.

Therefore, one of the points that any PYME or company should take into account when trying to trade their products in the international market is that it’s not enough to know the current name of the goods that they sell, but also it will be necessary to indicate the “code” That identifies it.

This “code” will appear frequently in the export and import documentation, and will be essential in determining the applicable tariffs for each product.

The legal regulations that rule the entire area of customs procedures in Singapore are:

  • Customs law
  • Goods and Services Tax Law

Both laws are responsible for regulating all merchandise that enters the country through import.

However, the import process in Singapore is quite open, most products can enter the country without further restriction, exceptions include products with chewing gum and weapons.

Regarding the tariffs and taxes corresponding to the import activity, the country is free of taxes except for products such as automobiles, gasoline, tobacco and alcohol.

However, every good that enters the country through importation is submit to the laws, and requires a customs permit to consider the activity and order the payment of corresponding taxes.

In Singapore, there is a licensing system that is required for 6% of total imports, related to fresh fruit and vegetables, plants, meat, animals, medicines, diffusion products (automatic licenses), and also a series of products that may represent a risk to health or to the State (without automatic licenses).

These licenses are issued by the Singapore International Company, another body that can also take part is the Ministry of Health.

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Merchandise value and its importance for international trade

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One of the main challenges that arises in the customs sector when processing merchandise resulting from an import is determining the customs value or the value of the transaction.

The proper application of this evaluation procedure allows promoting both the fluidity of trade, as well as the transparency of operations and the economic growth of the country.

Who is responsible for evaluating or determining the value of a merchandise?

The authority in charge of determining this is basically the Technical Committee for Customs Valuation of each country, which is made based on a number of regulations and procedures, the customs value of each merchandise.

The methodology to establish said customs value for imported merchandise subject to tax rates is established in the Agreement Relating to the Application of Article VII of the General Agreement on Tariffs and Trade of 1994.

Every country member of the

have an obligation to implement the Agreement and apply this methodology. Those who are not members also choose to adopt it making it applicable to most international trade.

The same is established according to the sum of three fundamental elements:

1- The value of the merchandise

2- Amount of insurance.

3- The cost of freight.

For what purpose is this measure applied?

Regarding international trade, guidelines or mechanisms have been developed to promote the principle of free competition using international standards of cooperation between companies and tax authorities that allows establishing the profit margins of most companies worldwide.

The customs value of imported goods is used for the following reasons:

• As a basis to determine the customs tax obligation for imported goods when ad valorem taxes apply.

• The classification of customs duties and the preferential origin are other key elements necessary to establish the tax obligation.

• Valuation, classification and origin are also vital for international trade statistics.

Currently, the World Customs Organization is working together with the Organization for Economic Co-operation and Development and the World Bank Group to encourage Customs and tax administrations to establish bilateral lines of communication in order to exchange knowledge, practices and data, when possible, which would help to ensure that each authority has the widest possible vision of a business, its compliance record so they can make informed decisions on the correct tax liability.

Establishing the value of imported merchandise is a starting point of what the final price of the product will be to the consumer from which the profit margins of the company that performs said import operation and consequently its tax responsibilities will derived; that is the reason why it is important that governments and companies are able to adhere to the regulatory frameworks established in this matter.

Automatic permits reduce risks in import operations

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One of the great protocols that must be complied with within the customs logistics processes in some countries are automatic permits which generate greater speed and minimize the risks within the process; to understand what it is we are going to define it in this article.

What are automatic permissions?

Basically, it is a process that allows customs authorities to obtain prior information on imports of certain goods so they perform a risk analysis of the operation that will be executed.

Importance of automatic permits

This type of permits works as part of the trade facilitation scheme in each country; the automatic notices and permits allow the customs authority to carry out better statistical control of import and export operations.

One of the countries that applies the use of automatic permits is Mexico, here are some of the requirements that apply to request this procedure.

• Merchandise description.

• Commercial brand (s) and models.

• Type of customs office of entry.

• Tariff code.

• Rate measurement unit.

• Commercial invoice number.

• Issue date of the commercial invoice.

• Marketing unit of measure according to the commercial invoice.

• Quantity (volume) to be imported according to the marketing unit of measure.

• Conversion factor.

• Marketing currency according to the commercial invoice.

• Total value of the commercial invoice in terms of the marketing currency.

• Value of the merchandise to be imported according to the commercial invoice in terms of the marketing currency.

• Exporting country to the national territory.

• Country of origin of the merchandise.

The purpose is to use this information as an instrument to prevent and combat recurrent harmful practices such as the incorrect classification of goods, undervaluation and triangulation of origin of the same which may affect the operation of strategic industries for national economic activity. 

What happens if I do not comply with this procedure?

It is important to consider that failing to apply for permits and notices can lead to delays in your shipments at the customs of the Tax Administration System of each country.

The requirements to manage this type of permits vary according to the type of product or merchandise to be imported, and it only applies to the definitive import regime, meaning, the entry of a product or merchandise from a foreign origin into the country for a definite time and it must be managed for each tariff code.

Customs agencies foster a safer global trade

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Due to the continues changes in the global economy, the international trade has become a primary activity to the economical grow and prosperity of any country. The world’s trade systems have changed significantly creating new methods for the purchase and sale of products that often require transportation from one continent to other.

The progressive increase in the international trade shows a prevailing need in the market of agents that provides advise, support and guarantees to those companies that needs to sell or buy a product somewhere else in the world but are unaware of the legal and logistic processes of this activity. Thus, several customs agencies appeared and, to a better understanding we will define it in this article.

Basically, the customs agency is the legal entity authorized to provide counseling services on customs matters focused on ensuring its users’ compliance of the legal regulations pertaining the import, export, customs transit and any operation or customs procedure intrinsic in such activities.

Therefore, a customs agency ensures the safe conditions so an entity may be able to trade a product or goods without further risks considering the legal regulations issued in the directives of the World Customs Organization (WCO).

Advantages of having a customs agency:

  • Endorse in the entire legal process of import and export.
  • Manage and facilitate the requirements needed prior to the dispatch/shipment or delivery of goods.
  • Provide counseling during the process of logistic management.
  • Promptness in the processes of dispatch/shipment and delivery of goods.
  • Decreases the operative costs.
  • Inspection and control of products.
  • Storage and distribution of goods.
  • Oversees the compliance of the international trade regulations.
  • Work with the authorities of each country to reduce tax evasion, smuggling and money laundering.

Obligations of the customs agencies:

All the advantages that the endorsement of a customs agency has to offer to your business or entity are based on the regulations of the WCO; among its responsibilities are:

  • Monitoring the services offered to the public.
  • Availability to provide services twenty four (24) hours.
  •  Integrated management of the logistic chain.
  • Authorization of the cargo inspections.
  • Declaration of goods.
  • System for the risk assessment of goods.
  • Previous electronic information.
  • Ongoing communication.
  • Assessment of the goods’ safety, among others.
  • Manage the transportation of the goods to the customs warehouse
  • Present before the customs authorities the necessary documentation to each process.

Due to the services provided by the customs agencies, the international trade activity currently can be performed safer and reliable; each day new private entities are added to the acquisition of this service securing their investment.

Now, therefore, considering the fundamental roll in the security and assistance of the global trade given by the customs agencies, ¿Have you evaluated the chance of getting this service for your company?