In Singapore, businesses involved in manufacturing or importation of goods are required to pay Custom Duties and/or Goods and Services Tax (GST).
What are Duties
A duty is an indirect tax levied upon goods, mostly, of international trading. In Singapore, duties are levied both upon goods manufactured within the city-state and/or imported into Singapore. The government of Singapore levies Duties on four categories of goods. These are:
- Tobacco products
- Intoxicating liquors
- Motor vehicles
- Petroleum products
For products that fall under any of the categories mentioned above, either the specific duty tax rates or ad valorem tax rate are applied. The specific duty tax rate is a designated amount per unit of weight, like for example, $352.00 per kilogram or other units of quantity. An ad valorem tax rate refers to the percentage of imported good’s customs value, like for example, 20 per cent ad valorem.
What is GST
Goods and Services Tax is exercised on the ad valorem tax on all non-dutiable and dutiable goods. The taxable GST is computed based on the CIF value (Costs, Insurance and Freight) and all duties and other chargeable amounts including those which are not indicated on the invoice.
How is Customs Value Valued
Singapore Customs prepared the methodologies in determining the customs value of a certain goods. The transaction value which may also refer to amount paid for or amount to be paid for of the imported goods is used to determine the customs value. Also included in the transaction value are all other charges like assists, commissions, proceeds of resale that may accrue to the vendor, packing costs, royalties, and license fees, to mention a few. The insurance charges and overseas freight are also included to determine the customs value in CIF.
Singapore Customs consider the following conditions before the transaction value is proposed and accepted:
- The price or the sale of goods is not subject to consideration or conditions for which, its value cannot be ascertained
- It must be manifested that its transaction value has never been impacted by any relationships between the supplier and the importer
- An evidence of sale is presented in manners like sale contracts, commercial invoices, and purchase orders, to mention a few
- There should not be any restrictions on how the goods are used by the buyer
In cases where the transaction value cannot be of help in determining the customs value, Singapore Customs prepared the following alternative methods:
- Residual valuation – It is the value figured by Singapore Customs and is based on the flexile interpretations of all other methods
- Computed value – It is the value derived on the cost of production, expenses and profits accrued in the country of origin relative to the imported goods
- Deductive value – This is the sale value or price of goods in Singapore adjusted for the costs acquired after the shipment
- Identical goods value – This refers to the transaction value of similar goods which are manufactured in Singapore and sold for export