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Guide on Singapore’s Free Trade Zones

Guide on Singapore’s Free Trade Zones

Free trade zones in Singapore are specific areas that allow the importation, sale or export of goods without accounting the payment of customs, excise duties, or goods and services tax. These areas are used to encourage trade and facilitate the transshipment of goods to and from Singapore

Goods can be stored temporarily in Singapore and then loaded into another ship or aircraft for exporting without the need for customs clearance. Singaporean free trade zones allow the warehousing, storage, distribution, transshipment, and exportation of goods. The legislation that regulates the activity of free trade zone is prescribed by the Free Trade Zones ActOur lawyers in Singaporecan guide you if you want to open a free zone company in the country. 

The video below offers information on Singapore’s free trade zones:

GST exemption of free trade zones in Singapore

GST stands for goods and services tax. GST is generally imposed on all types of goods and services in Singapore. Those who want to set up a business in a free trade zone should know that their company will be exempt from the payment of the GST (goods and services tax, an equivalent of the value added tax). 

This is because Singapore is engaged in entrepot trade, which is a way of trading wherein imported goods are immediately exported without any further processing or repacking. Goods entered into free trade zones are only taxed when they are taken out of the area and entered into customs territory. Our law firm in Singapore can advise you on how to exempt your goods from GST.

Free trade zones in Singapore 

According to the law in Singapore, the creation of free trade zones is established under a declaration signed by the Minister of Singapore, which is published in the Official Gazette. After the free zones became legally recognized, the areas are now under the supervision of the Singaporean Free Trade Authority, the entity that administers, maintains, and operates the free trade zones. Currently, Singapore has nine free trade zones

These are: Brani TerminalKeppel District ParkTanjong Pagar Terminal and Keppel TerminalJurong PortSembawang WharvesPasir Panjang WharvesChangi Airport Group, Changi Airport Cargo Terminal Complex and the Singapore Freeport, which is located in Airport Logistics ParkOur Singapore lawyers can inform you on how to make use of these free trade zones. If you need more details on the free trade zones in Singapore, we invite you to read the short presentation below: 

  • according to the Singapore Customs, goods such as tobacco and alcohol can be stored in the free trade zones (FTZ) for a period of 30 days prior to being moved to licensed areas – the storage of similar goods falls under the rules of Circular No. 01/2020;
  • if you want to operate in the Jurong Port, you must know that you will benefit from more that 17,000 square meters of warehouse space;
  • in order to develop an activity in the FTZ, one must obtain a permit – a temporary permit is issued for a period of minimum 24 hours to up to 2 weeks;
  • for corporate entities, the permits are issued for a period of minimum 1 year to maximum 3 years;
  • regardless of the type of permit you may require, the issuance of the permit will generally last approximately 4 days.  

What are the tax regulations applicable to FTZ in Singapore?

As we mentioned above, goods that are stored in the FTZ are not charged with the GST. More importantly, the customs duty is also not applicable for goods that are generally charged with this tax. According to the legislation in Singapore, there are four main categories of goods that are charged with the customs duty, as follows: tobacco and tobacco products, liquors, petroleum products and biodiesel products, and motor vehicles

However, when stored in the FTZs in Singapore, such goods are not charged with the customs duty as they are considered to be under the surveillance of customs authorities and therefore, the tax will not be applied. Still, persons who will import goods in the Singaporean FTZs have to be aware that the customs duty and the GST can be charged in specific conditions. 

For instance, in the case in which the said goods are to be consumed in the FTZ where they are stored, then both taxes will apply. For goods which are stored in a FTZ and which will be traded on the Singaporean market, the same rule will apply. In this particular situation, you will also need to obtain a permit; you can request more details on this subject from our team of lawyers in Singapore

You should be aware that the customs duty and the GST will not be charged to your goods (nor will you need a permit), in the case in which you simply store the goods in a FTZ with the purpose of moving them to another FTZ in Singapore or a warehouse. 

What are the registration requirements for companies in FTZs in Singapore? 

Businessmen who want to register a company in any of the FTZs that are currently operating in Singapore should comply with a set of incorporation rules. Besides this, they must also have the minimum capital required – those who will need a warehouse have to subscribe a minimum share capital of SG$100,000, while companies that simply need an office space must deposit SG$50,000. 

You must be aware that the capital does not have to be deposited during the registration process; it can be deposited throughout the first year of business activities; the capital needed for the company can also be used for business expenses; our law firm in Singapore can offer more details regarding this matter. 

What are the rules on moving the goods in and out of the Singaporean FTZ? 

Companies and individuals that move goods in and out of a free trade zone have to know that specific tax regulations can apply, depending in the goods they will transport and the destination of such goods. As a general rule, such goods will be transported for import and export purposes.

In the case in which you will move goods out of Singapore, you must present in your GST return that the respective goods were charged with a 0% GST. You will also be exempt from the payment of the GST in the case in which you will store goods in warehouses that have obtained a license as per the regulations of the Customs Act and the GST Act; this will apply if the goods stored are to be transported to overseas destinations. 

What are the main free zones in Singapore? 

Those who are interested in registering a business in the Singaporean FTZ must know that out of the nine FTZ, two of them are the most important – the Jurong Port and the Changi Airport Group. The first operates as a leading international maritime port; in one year, the FTZ is transited by approximately 15,000 vessels, both domestic and foreign. If you want to start a business in the Jurong Portour law firm in Singapore can represent you in the registration formalities.  

Free trade zone authorities in Singapore

At the moment, Singapore has three free trade zone authorities, which are represented by the PSA Corporation Ltd.Jurong Port PTE Ltd. and Changi Airport Group PTE Ltd. They are in charge of providing and maintaining facilities in the area that are necessary for the proper and efficient operation of the free trade zones

They are also in charge of enforcing the requirements laid down in the Free Trade Zones ActOur attorneys in Singapore can tell you what these requirements are. If you plan on placing your goods in one of Singapore’s free trade zones, make sure you comply with the requirements. We invite you to contact our Singapore lawyers who can help you.

GST exemption of free trade zones in Singapore

GST stands for goods and services tax. GST is generally imposed on all types of goods and services in Singapore. Those who want to set up a business in a free trade zone should know that their company will be exempt from the payment of the GST (goods and services tax, an equivalent of the value added tax). 

This is because Singapore is engaged in entrepot trade, which is a way of trading wherein imported goods are immediately exported without any further processing or repacking. Goods entered into free trade zones are only taxed when they are taken out of the area and entered into customs territory. Our law firm in Singapore can advise you on how to exempt your goods from GST.

Free trade zones in Singapore 

According to the law in Singapore, the creation of free trade zones is established under a declaration signed by the Minister of Singapore, which is published in the Official Gazette. After the free zones became legally recognized, the areas are now under the supervision of the Singaporean Free Trade Authority, the entity that administers, maintains, and operates the free trade zones. Currently, Singapore has nine free trade zones

These are: Brani TerminalKeppel District ParkTanjong Pagar Terminal and Keppel TerminalJurong PortSembawang WharvesPasir Panjang WharvesChangi Airport Group, Changi Airport Cargo Terminal Complex and the Singapore Freeport, which is located in Airport Logistics ParkOur Singapore lawyers can inform you on how to make use of these free trade zones. If you need more details on the free trade zones in Singapore, we invite you to read the short presentation below: 

  • according to the Singapore Customs, goods such as tobacco and alcohol can be stored in the free trade zones (FTZ) for a period of 30 days prior to being moved to licensed areas – the storage of similar goods falls under the rules of Circular No. 01/2020;
  • if you want to operate in the Jurong Port, you must know that you will benefit from more that 17,000 square meters of warehouse space;
  • in order to develop an activity in the FTZ, one must obtain a permit – a temporary permit is issued for a period of minimum 24 hours to up to 2 weeks;
  • for corporate entities, the permits are issued for a period of minimum 1 year to maximum 3 years;
  • regardless of the type of permit you may require, the issuance of the permit will generally last approximately 4 days.  

What are the tax regulations applicable to FTZ in Singapore?

As we mentioned above, goods that are stored in the FTZ are not charged with the GST. More importantly, the customs duty is also not applicable for goods that are generally charged with this tax. According to the legislation in Singapore, there are four main categories of goods that are charged with the customs duty, as follows: tobacco and tobacco products, liquors, petroleum products and biodiesel products, and motor vehicles

However, when stored in the FTZs in Singapore, such goods are not charged with the customs duty as they are considered to be under the surveillance of customs authorities and therefore, the tax will not be applied. Still, persons who will import goods in the Singaporean FTZs have to be aware that the customs duty and the GST can be charged in specific conditions. 

For instance, in the case in which the said goods are to be consumed in the FTZ where they are stored, then both taxes will apply. For goods which are stored in a FTZ and which will be traded on the Singaporean market, the same rule will apply. In this particular situation, you will also need to obtain a permit; you can request more details on this subject from our team of lawyers in Singapore

You should be aware that the customs duty and the GST will not be charged to your goods (nor will you need a permit), in the case in which you simply store the goods in a FTZ with the purpose of moving them to another FTZ in Singapore or a warehouse. 

What are the registration requirements for companies in FTZs in Singapore? 

Businessmen who want to register a company in any of the FTZs that are currently operating in Singapore should comply with a set of incorporation rules. Besides this, they must also have the minimum capital required – those who will need a warehouse have to subscribe a minimum share capital of SG$100,000, while companies that simply need an office space must deposit SG$50,000. 

You must be aware that the capital does not have to be deposited during the registration process; it can be deposited throughout the first year of business activities; the capital needed for the company can also be used for business expenses; our law firm in Singapore can offer more details regarding this matter. 

What are the rules on moving the goods in and out of the Singaporean FTZ? 

Companies and individuals that move goods in and out of a free trade zone have to know that specific tax regulations can apply, depending in the goods they will transport and the destination of such goods. As a general rule, such goods will be transported for import and export purposes.

In the case in which you will move goods out of Singapore, you must present in your GST return that the respective goods were charged with a 0% GST. You will also be exempt from the payment of the GST in the case in which you will store goods in warehouses that have obtained a license as per the regulations of the Customs Act and the GST Act; this will apply if the goods stored are to be transported to overseas destinations. 

What are the main free zones in Singapore? 

Those who are interested in registering a business in the Singaporean FTZ must know that out of the nine FTZ, two of them are the most important – the Jurong Port and the Changi Airport Group. The first operates as a leading international maritime port; in one year, the FTZ is transited by approximately 15,000 vessels, both domestic and foreign. If you want to start a business in the Jurong Portour law firm in Singapore can represent you in the registration formalities.  

Free trade zone authorities in Singapore

At the moment, Singapore has three free trade zone authorities, which are represented by the PSA Corporation Ltd.Jurong Port PTE Ltd. and Changi Airport Group PTE Ltd. They are in charge of providing and maintaining facilities in the area that are necessary for the proper and efficient operation of the free trade zones

They are also in charge of enforcing the requirements laid down in the Free Trade Zones ActOur attorneys in Singapore can tell you what these requirements are. If you plan on placing your goods in one of Singapore’s free trade zones, make sure you comply with the requirements. We invite you to contact our Singapore lawyers who can help you.