COUNTRY

Singapore

SINGAPORE FREE TRADE ZONES (FTZ)

Relin Consultants is a professional firm specializing in company formation in the Asia Pacific. We advise and assist our clients in various types of company setups. If you intend to set up a Singapore company in the Free Trade zones, our company formation specialist can guide you through the specifics and process.

WHAT IS A FREE TRADE ZONE IN SINGAPORE?

Free trade zones are selected regions within Singapore where businesses can import, sell, or export goods without paying customs, excise charges, and goods and services tax (GST).

Singapore is a popular destination for entrepot trading, so the government has developed various zones within the country to benefit companies undertaking such business activity. 

Entrepot trading refers to a company that imports goods into Singapore and immediately exports them without further processing or repacking. Goods are usually not taken out of the area and do not enter customs territory, thus being GST exempted. 

WHAT IS THE SINGAPORE FREE TRADE ZONES ACT?

Free trade zones are governed by the Free Trade Zones Act, enacted in 1966 and was most recently revised in 2014. The legislation mandates the following:

  • The officials are in charge of inspecting the activity of enterprises operating in free zones.
  • The activities that free zone enterprises in Singapore can engage in.
  • The categories of licenses and permits necessary to manufacture and sell items in the free zones,
  • The consequences for failing to comply with the free zone authorities’ laws.

The Free Zone Advisory Committee, the Director of the Singapore Customs, and the Ministry for Trade and Industry, are the key agencies that oversee the activities of free zone enterprises.

BENEFITS OF THE FREE TRADE ZONE IN SINGAPORE

Imports are exempted from the Goods and Services Tax

Company’s operating and importing within a free-trade zone will not be subjected to the goods and service tax. The company will only be liable for any import duty and  GST if the goods are consumed within the free trade zones or once they enter Singapore’s customs territory and are distributed or consumed locally. 

Imports are exempted from customs duties

Certain goods such as intoxicating liquors, tobacco products, motor vehicles, petroleum products, and biodiesel blends are subjected to customs duties if imported to Singapore. However, qualifying free zone companies will be exempted from customs duties for such imports. 

Exempted from import permit

Singapore companies must obtain an import permit before importing to Singapore, but a free zone company is exempted from obtaining customs permission. This reduces a lot of administrative burden for a company. 

AREAS OF THE FREE TRADE ZONES IN SINGAPORE

There are currently 9 Free Trade Zone areas in Singapore as listed below. 

  • Brani Terminal
  • Keppel District Park
  • Pasir Panjang Terminal
  • Sembawang Wharves
  • Tanjong Pagar Terminal and Keppel Terminal
  • Jurong Port
  • The Changi Airport Group
  • Airport logistics Park of Singapore
  • Changi Airport Terminal Complex

MAIN FREE TRADE ZONES IN SINGAPORE

Jurong Port

  • Jurong Port is one of the world’s major multifunctional marine ports, handling bulk, general, and containerized goods. Every year, at least 15,000 international and regional boats dock at the port’s main terminal.
  • The port has around 170,000 square meters of warehouse space available to prospective investors and companies. Jurong also boasts one of the largest common-user cement terminals in the world.
  • Jurong Port is also home to the Offshore Marine Centre. This cutting-edge waterfront facility provides services to local and worldwide businesses involved in the manufacture of offshore and marine equipment.

The Changi Airport Group

  • The Changi Airport Group offers services such as 
  1. 100,000 square meters of warehouse and office space 
  2. at least 3 million tons of yearly handling space
  3. more than 70 hectares of free trade zones
  4. effective customs procedures around the clock
  5. at least 14 designated freight parking spaces
  • Changi Airport offers multinational corporations a one-of-a-kind chance to construct regional redistribution centres in a Free Zone with a competitive advantage over other regional airports.
  • The free zone also provides direct access to the Changi Airfreight Centre, guaranteeing that your goods and products arrive on schedule.

REQUIREMENTS TO SET UP A FREE ZONE COMPANY IN SINGAPORE

If you are planning to operate within the Singapore free trade zones, you must registering your Singapore company with at least S$50,000 to S$100,000 share capital, depending on your business activity. For a newly incorporated company, you are allowed up to 12 months to deposit the share capital into the Singapore company’s corporate bank account.

Alternatively, a foreign company can also apply to operate within the free trade zone. 

Post incorporation, a company must secure a permit or license from one of three authorities governing the relevant FTZ. We have listed below the authorities governing the relevant free trade zones. 

PSA Corporation Limited is in charge of the free trade zones listed below. 

  • Tanjong Pagar Terminal and Keppel Terminal;
  • Sembawang Wharves;
  • Brani Terminal;
  • Keppel Distripark;
  • Keppel Distripark Linkbridge; and
  • Pasir Panjang Terminal

Jurong Port Pte Ltd has been designated as the operating authority for: –

  • Jurong Port

Changi Airport Group (Singapore) Pte Ltd is responsible for the following: – 

  • Singapore Airport Logistics Park
  • Changi Airport Cargo Terminal Complex.

Team Relin can provide further information on the requirements after assessing your company’s business activity, as the requirements are slightly different for each entity.

FAQs

Do I Need A Permit To Operate In A Free Trade Zone?

Yes, before a company can commence operations and operate in the Singapore free trade zones the company must seek permission from the relevant free trade zone authorities.

What Paperwork Are Necessary To Make An Application For A Warehouse/Office At Changi Airport?

  • Company certificate of incorporation.
  • Company audited accounts for the previous fiscal year.
  • A paid-up capital of S$50,000 for an office unit or S$100,000 for a warehouse.
  • An application form from the Changi Airfreight Centre.

Are Duties And Taxes Levied On Products Entering The Free Trade Zone?

No, items imported into the Free Trade Zone are exempted from tax and duties.

Does Singapore Have Special Economic Zones?

Yes, Singapore’s special economic zones in Singapore are referred to as free trade zones. It offers tax exemptions to companies operating within the region with qualifying business activity.

Is There Free Trade Zone In Singapore?

Yes, there are 9 free trade zones in Singapore. Three separate authorities are governing the different free trade zones.

What Is The Difference Between Free Trade Area And Free Trade Zone?

A free trade area (FTA) refers to a specific region where two or a group of countries seal economic cooperation.  The objective of such an arrangement is to reduce barriers in trading, relating to tariffs and import quotas. Such agreements will encourage the free trade of goods and services between the member countries.

You can refer to the following link for a list of free trade agreements entered by Singapore.  

Free trade zones refer to a location where a company can import goods and re-export without the involvement of customs agencies in Singapore and can be exempted from import duties and taxes.

How Does A Free Trade Zone Work In Singapore?

Free trade zones provide the company a free tax zone. In Singapore, free zones businesses can import, sell, or export goods without paying any customs, excise charges, and goods and services tax (GST).

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