What You Need To Know About Free Trade Zones And Free Zone Companies

In Singapore, there are nine free trade zones that allow companies to import, sell, or export goods without customs, duties, or goods and services tax (GST). They are:

–          Brani Terminal;

–          Keppel District Park;

–          Tanjong Pagar Terminal and Keppel Terminal;

–          Jurong Port;

–          Sembawang Wharves;

–          Pasir Panjang Wharves,

–          Changi Airport Group;

–          Changi Airport Cargo Terminal Complex;

–          Singapore FreePort is located in the Airport Logistics Park.

Background of these zones

The Free Trade Zones Act which was last amended in 2014, regulates these zones. Within these zones, companies can temporarily store their goods until they are loaded for export without customs clearance. The law mainly covers the following:

• The respective authorities are responsible for verifying the activities conducted by the companies in these zones.
• The activities allowable by free zone companies in Singapore
• The types of licenses and permits necessary to carry out such activities in the free zones
• The penalties for not abiding by the regulations imposed by the authorities

How to form a free zone company?

To incorporate a free zone company is the same procedure as incorporating any other company in Singapore. Upon incorporation, the free zone company will need to obtain a permit from PSA Corporation Authority and TradeNet for permission to import, export and transport their goods overseas.

The next thing to note is that the minimum share capital to set up a free zone company is S$100,000 and S$50,000 if the company requires warehousing spaces and office spaces respectively.

Useful to note that

To operate in Singapore free trade zones, you need two types of licenses. One for corporate users, and the other for individuals with limited validity, lasting between 24 hours to 2 weeks. In the case of corporate users, it can last 1 or 3 years depending on the companies’ requirements and varying fees will apply. The application process takes about 4-7 days’ time.

The advantages of free trade zone companies in Singapore are:

• You do not need permits or licenses for the trans-shipment of goods in the free zones
• No custom duties for goods transiting or stored in the free zones
• There is no GST applicable on goods imported into the free zones
• Custom procedures are streamlined for companies operating in the free zones.

Interestingly, the two largest free zones in Singapore are Jurong Port and Changi Airport, with the former accessing the largest river in Singapore, and the latter being the largest and busiest airport in the region.

To find out more about incorporation matters, feel free to approach us for a non-obligatory discussion.

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