What is a Bonded Warehouse in Singapore?
A bonded warehouse in Singapore is a secure facility where imported goods can be stored without paying customs duties and Goods and Services Tax (GST) until they are cleared for release into the local market, re-exported, or used in a specific manner such as manufacturing. This allows businesses to:
- Defer payment of duties and GST can improve cash flow and reduce upfront costs.
- Postpone import decisions: Businesses can store goods in a bonded warehouse until they have a confirmed buyer or market demand.
- Take advantage of changing markets: Goods can be re-exported to other countries without paying import duties in Singapore.
- Store sensitive goods: Bonded warehouses offer high levels of security and are monitored by Singapore Customs.
Benefits of Using Bonded Warehouses
In addition to the benefits listed above, bonded warehouses offer several other advantages, including:
- Reduced risk of damage: Goods stored in bonded warehouses are protected from the elements and theft.
- Improved inventory control: Bonded warehouses have sophisticated inventory management systems that track the movement of goods.
- Consolidation and deconsolidation: Goods can be consolidated or deconsolidated in a bonded warehouse before being shipped to their final destination.
- Value-added services: Some bonded warehouse operators offer value-added services such as labelling, packing, and kitting.
Bonded warehouses in Singapore can be categorized in several ways, depending on the criteria used:
1. By type of goods stored:
- Dry Bonded Warehouses: Store general cargo such as electronics, clothing, machinery, furniture, pharmaceuticals, and foodstuffs.
- Wet Bonded Warehouses: Store dutiable goods such as liquor, tobacco, motor vehicles, petroleum, and biodiesel blends.
2. By type of license:
- Licensed Warehouse (LW): Allows storage of dutiable goods with duty and GST suspended. Three types of licenses are available: LW Type I, LW Type II, and LW Type III, with varying levels of facilitation and compliance requirements.
- Zero-GST Warehouse (ZGS): Allows storage of non-dutiable goods with GST suspended. Three types of licenses are available: ZGS Type I, ZGS Type II, and ZGS Type III, with variations similar to the LW scheme.
3. By level of security:
- Standard: Meets basic security requirements set by Singapore Customs.
- Enhanced: Implements additional security measures to protect high-value goods.
4. By location:
- Free Trade Zone (FTZ) Warehouses: Located within FTZs, these warehouses offer additional benefits such as duty-free importation and exemption from specific regulations.
- Non-FTZ Warehouses: Located outside FTZs, with slightly different customs procedures and requirements.
5. By services offered:
- Basic Storage: Provides secure storage for goods without any additional services.
- Value-Added Services: Additional services include labelling, packing, kitting, and order fulfilment.
6. By size:
- Small: Typically caters to small businesses with limited storage needs.
- Large: Can accommodate large volumes of goods and offer a more comprehensive range of services.
7. By ownership:
- Independent: Owned and operated by a private company.
- Public: Owned and operated by a government agency.
It is important to note that these categories are not mutually exclusive. A bonded warehouse can belong to multiple categories simultaneously. The best way to categorize a bonded warehouse depends on the specific needs and requirements of the user.
What is the Difference Between a Warehouse and a Bonded Warehouse?
Both warehouses and bonded warehouses serve the purpose of storing goods, but they have critical differences in their function and regulations. Here’s a breakdown:
Warehouse:
- General storage: Used for storing any domestic and imported goods.
- Customs regulations: Goods are subject to complete import duties and taxes immediately upon arrival.
- Flexibility: Offers flexibility in terms of goods and storage periods.
- Security: Security levels can vary depending on the individual warehouse.
- Services: May offer essential services like storage, packing, and shipping.
Bonded Warehouse:
- Specialized storage: Exclusively used for storing imported goods under customs supervision.
- Customs benefits: Allows deferral of import duties and taxes until goods leave the warehouse for consumption or re-export.
- Strict regulations: Subject to specific rules and regulations set by customs authorities.
- Enhanced security: Offers high levels of security due to customs oversight.
- Additional services: May offer value-added services like labelling, kitting, and order fulfilment.
Here’s a table summarizing the key differences:
| Feature | Warehouse | Bonded Warehouse |
|---|---|---|
| Purpose | General storage | Specialized storage for imported goods |
| Customs regulations | Complete duties and taxes upon arrival | Deferral of duties and taxes until goods leave |
| Flexibility | More flexible | Less flexible due to customs regulations |
| Security | Varies | High due to customs oversight |
| Services | Basic services | May offer value-added services |
| Suitable for | Any goods | Imported goods |
Additional differences:
- Ownership: Bonded warehouses often require special licenses and permits, whereas warehouses generally don’t.
- Location: Bonded warehouses may be located within free trade zones (FTZs) to enhance trade benefits further.
- Cost: Bonded warehouses may be slightly more expensive than regular warehouses due to the additional security and regulatory requirements.
Who Can Use a Bonded Warehouse
Any legal entity in Singapore can use a bonded warehouse, provided they meet the eligibility requirements set by Singapore Customs. Here’s a breakdown of the main types of entities that typically utilize bonded warehouses:
1. Importers:
- Companies importing goods into Singapore.
- They benefit from deferring import duties and taxes, improving cash flow and reducing upfront costs.
- This allows them to postpone decisions on import and consumption until market demand is confirmed.
2. Exporters:
- Companies re-exporting goods to other countries.
- They can avoid paying import duties in Singapore by storing the goods in a bonded warehouse until they are ready for shipment.
- This allows them to take advantage of changing markets and opportunities.
3. Manufacturers:
- Companies use imported goods in their manufacturing processes within the bonded area.
- They benefit from duty suspension on imported raw materials and components, reducing production costs.
- This allows them to remain competitive in the global market.
4. Distributors:
- Companies store goods in bulk for distribution within Singapore or the region.
- They can benefit from economies of scale by purchasing goods in bulk and storing them in a bonded warehouse.
- This allows them to respond quickly to customer orders and maintain readily available inventory.
5. Logistics Providers:
- Companies providing logistics and warehousing services for other businesses.
- They can offer bonded warehousing as a value-added service to their clients.
- This allows them to attract more business and provide a more comprehensive range of services.
Eligibility requirements:
To be eligible to use a bonded warehouse in Singapore, an entity must:
- Be registered with the Accounting and Corporate Regulatory Authority (ACRA)
- Have a valid Goods and Services Tax (GST) registration
- Maintain proper accounting records and submit regular reports to Singapore Customs
- Meet any specific requirements for the type of goods being stored
It is important to note that Singapore Customs may have additional regulations and requirements depending on the specific circumstances. It is always advisable to consult with a customs broker or freight forwarder for guidance on using bonded warehouses in Singapore.
What is the Difference between Free Trade Zone and Bonded Warehouse in Singapore?
A Free Trade Zone (FTZ) warehouse is a specialized facility within a designated FTZ area. FTZs offer free trade and processing, while bonded warehouses prioritize secure storage with duty deferral.
While both FTZs and bonded warehouses offer benefits for businesses dealing with imported goods, they have distinct features and purposes:
Function:
- FTZs: Designated areas within Singapore where imported goods are exempt from import duties and GST until they are released for consumption within Singapore or re-exported.
- Bonded Warehouses: Secure facilities where imported goods can be stored without paying import duties and GST until they are released for consumption within Singapore, re-exported, or used in a specific manner within the bonded area (e.g., manufacturing).
Location:
- FTZs: Located in specific designated areas within Singapore.
- Bonded Warehouses: These can be located anywhere in Singapore, not only within FTZs.
Customs regulations:
- FTZs: Goods can be freely traded and processed within the zone without customs intervention unless released for consumption in Singapore.
- Bonded Warehouses: Goods remain under customs control and are subject to strict regulations regarding their movement and use.
Benefits:
- FTZs: Offer duty-free importation, exemption from specific regulations, and access to a global market through trade agreements.
- Bonded Warehouses: Offer deferral of import duties and taxes, postponement of import decisions, and flexibility for re-export or use within the bonded area.
Suitable for:
- FTZs: Ideal for businesses involved in manufacturing, assembling, trading, or distribution of goods for export.
- Bonded Warehouses: Ideal for businesses wanting to defer import duties and taxes, postpone import decisions, or use imported goods in manufacturing within a secure environment.
Here’s a table summarizing the key differences:
| Feature | Free Trade Zone (FTZ) | Bonded Warehouse |
|---|---|---|
| Function | Duty-free storage and processing | Duty-free storage |
| Location | Designated areas | Anywhere in Singapore |
| Customs regulations | Less strict | More strict |
| Benefits | Duty-free importation, trade agreements, access to the global market | Deferral of duties and taxes, flexibility, secure environment |
| Suitable for | Manufacturing, assembling, trading, and distribution for export | Importers, exporters, manufacturers, distributors |
Choosing between FTZs and bonded warehouses:
The best option for your business depends on your specific needs. Consider the following factors:
- Purpose: Do you need duty-free storage and processing, or do you need to defer import duties and taxes?
- Goods: What type of goods will you be storing? Certain goods may have restrictions in FTZs.
- Location: For strategic reasons, do you need to be within a specific area?
- Regulations: Can you comply with the stricter rules of a bonded warehouse?
- Benefits: Which benefits are most important to your business?
Consulting with a customs broker or freight forwarder can help you make the best decision for your business and maximize your benefits.
What Are the Two Types of Bonded Warehouses
In Singapore, there are two main types of bonded warehouses:
1. Licensed Warehouse (LW):
- Used for storing dutiable goods such as liquor, tobacco, motor vehicles, petroleum, and biodiesel blends.
- Requires a specific license issued by Singapore Customs.
- Offers indefinite storage with suspended duty and GST.
- Subject to strict regulations and regular audits by customs authorities.
- Divided into three subtypes:
- LW Type I: For high-value, dutiable goods requiring enhanced security and stringent controls.
- LW Type II: For general dutiable goods with standard security measures.
- LW Type III: For specific goods like motor vehicles and petroleum products.
2. Zero-GST Warehouse (ZGS):
- Used for storing non-dutiable goods such as electronics, clothing, and machinery.
- Allows suspension of GST until the goods leave the warehouse.
- Requires a specific license issued by Singapore Customs.
- Offers flexibility for re-export, distribution, and value-added services.
- Divided into three subtypes:
- ZGS Type I: For bulk storage of non-dutiable goods.
- ZGS Type II: For value-added services like labelling, packing, and kitting.
- ZGS Type III: For temporary storage of non-dutiable goods.
Choosing the correct type of bonded warehouse depends on the specific type of goods you are storing and your intended use for them.
Here’s a table summarizing the key differences:
| Feature | Licensed Warehouse (LW) | Zero-GST Warehouse (ZGS) |
|---|---|---|
| Goods stored | Dutiable goods | Non-dutiable goods |
| Duty and GST | Suspended | Suspended (GST only) |
| License required | Yes | Yes |
| Security level | Varies | Standard |
| Subtypes | LW Type I, II, III | ZGS Type I, II, III |
| Suitable for | High-value goods, general dutiable goods, specific types | Electronics, clothing, machinery, bulk storage, value-added services |
What are the 5 Free Trade Zones in Singapore?
As of 2023, there are nine Free Trade Zones (FTZs) in Singapore, not five. They are strategically located across the country, offering a variety of benefits for businesses involved in international trade and distribution.
Here’s a list of the nine FTZs in Singapore:
1. Jurong Island FTZ: The largest and most diverse FTZ, focusing on energy and chemicals, petrochemicals, biomedical sciences, and advanced manufacturing.
2. Changi Airport Cargo Terminal FTZ: Situated within Changi Airport, offering efficient cargo handling and access to global airfreight networks.
3. Pasir Panjang Terminal FTZ: Strategically located near the port of Pasir Panjang, it specializes in container handling, warehousing, and logistics.
4. Tuas Terminal FTZ: Under development, designed to be a next-generation mega port with automated container handling and advanced logistics facilities.
5. Seletar Aerospace Park FTZ: Home to the aerospace industry in Singapore, focusing on aircraft maintenance, repair, overhaul (MRO), and aerospace manufacturing.
6. Tampines Logistics Hub FTZ: Centrally located, offering warehousing, distribution, and e-commerce fulfilment services.
7. Woodlands Regional Centre FTZ: Part of the Woodlands regional development plan, focusing on advanced manufacturing, logistics, and digital services.
8. Punggol Digital District FTZ: A newly established FTZ dedicated to the digital economy, focusing on data centres, cybersecurity, and artificial intelligence.
9. One-North FTZ: Located within the research and innovation hub of One-North, it specializes in bioinformatics, medical technology, and high-tech manufacturing.
These FTZs offer a range of benefits for businesses, including:
- Duty-free import and re-export: Businesses can import and re-export goods without paying import duties and GST, making them competitive in the global market.
- Trade agreements: FTZs benefit from trade agreements with other countries, facilitating smoother trade processes and reducing trade barriers.
- Global market access: FTZs offer convenient access to international markets through air and seaports, connecting businesses to a broader customer base.
- Streamlined regulations: FTZs generally have streamlined rules and procedures, making it easier for businesses to operate.
- Advanced infrastructure: FTZs have state-of-the-art infrastructure, including modern warehouses, logistics facilities, and port terminals.
To learn more about specific FTZs and their benefits, you can visit the websites of the relevant authorities, such as JTC Corporation, Changi Airport Group, and PSA Corporation.
What Does it Mean if a Warehouse is Bonded?
The term “bonded” indicates that the goods are under the control and supervision of the customs authorities until they are released from the warehouse. This means that the owner of the goods must comply with specific regulations and procedures set by customs.
Bonded warehouses are subject to strict regulations and procedures set by customs authorities. These regulations may include:
- Security requirements: Bonded warehouses must meet specific security standards to ensure the safety and integrity of stored goods.
- Recordkeeping: Businesses must maintain accurate records of all goods stored in the warehouse, including their origin, value, and intended use.
- Reporting requirements: Businesses must submit regular reports to customs authorities detailing the movement and status of goods in the warehouse.
What are the Examples of Bonded Warehouses?
Here are some examples of bonded warehouses in Singapore, categorized by type:
Dry Bonded Warehouses:
- PSA Lion Terminal: Located within Pasir Panjang Terminal FTZ, it specialises in containerized cargo and offers various value-added services.
- Jurong Gateway Warehouse: Within Jurong Island FTZ, it caters to various industries and offers bulk storage and order fulfilment solutions.
- CWT Warehouse: Strategically located near Changi Airport, providing bonded storage for general cargo and efficient access to air freight networks.
- Yusen Logistics: Operates multiple bonded warehouses across Singapore, offering flexible storage options and customized solutions for different industries.
- DHL Global Forwarding: Offers a network of bonded warehouses strategically located throughout the country, providing comprehensive logistics and warehousing services.
Wet Bonded Warehouses:
- Vopak Singapore Terminal: Located on Jurong Island, one of Asia’s largest independent tank storage terminals, handling various bulk liquid chemicals and petroleum products.
- Oiltanking Singapore: Situated near the port of Pasir Panjang, a leading provider of storage and handling services for petroleum products and petrochemicals.
- Universal Terminal: Located within Jurong Island FTZ, it specializes in storing and handling liquefied natural gas (LNG) and other bulk gases.
- GAC Singapore: Offers bonded storage and logistics services for various types of wet cargo, including liquor, tobacco, and motor vehicles.
- SATS Coolport: Provides specialized bonded warehousing solutions for temperature-controlled goods, such as pharmaceuticals and food products.
FTZ Warehouses:
- Jurong Port Logistics Centre: Located within Jurong Island FTZ, offering multi-modal cargo handling facilities and warehouse space for various industries.
- Changi Airfreight Centre: Situated within Changi Airport FTZ, dedicated to air cargo handling and providing bonded warehousing space for various goods.
- Tuas Terminal West (Under Development): Designed to be a next-generation mega port with automated container handling and advanced logistics facilities, including bonded warehouses.
- Seletar Aerospace Park: Home to the aerospace industry in Singapore, offering bonded warehouse space for aircraft parts and components.
- Woodlands Regional Centre: Part of the Woodlands regional development plan, featuring bonded warehouse space suitable for various industries.
Please note: This list is not exhaustive and only provides a few examples. Many other bonded warehouses operate in Singapore, catering to various industries and offering diverse services.
What is the Warehouse Scheme in Singapore?
The term “warehouse scheme” in Singapore can refer to several different programs and regulations governing the operation and use of warehouses for various purposes. Here are some of the main ones:
1. Bonded Warehouse Scheme:
- Allows storage of imported goods without paying customs duties and GST until they are cleared for release into the local market, re-exported, or used in a specific manner within the bonded area (e.g., manufacturing).
- It aims to strengthen Singapore’s status as a logistics and distribution hub.
- Offers benefits like deferral duties and taxes, postponement of import decisions, and flexibility for re-export.
- Includes two types of licenses: Licensed Warehouse (LW) and Zero-GST Warehouse (ZGS).
2. Specialised Warehouse Scheme:
- Designed for warehouses storing mainly overseas goods for eventual export.
- Qualifies for zero-rating of services performed on qualifying goods and the lease/tenancy/license of storage space.
- Promotes value-added services and facilitates international trade.
3. Free Trade Zone (FTZ) Scheme:
- Designates specific areas within Singapore where imported goods are exempt from import duties and GST until they are released for consumption within Singapore or re-exported.
- Encourages manufacturing, assembly, trading, and distribution for export.
- Offers duty-free benefits, access to global markets, and trade agreements.
- Requires adherence to specific regulations and restrictions.
4. Licensed Warehouse Scheme:
- Specifically targets dutiable goods like liquor, tobacco, vehicles, and petroleum.
- Allows indefinite storage under customs supervision with suspended duty and GST.
- Ensures secure storage and compliance with customs regulations.
5. Zero-GST Warehouse Scheme:
- Enables storage of non-dutiable goods with suspended GST until they leave the warehouse.
- Simplifies customs procedures for imported goods not destined for local consumption.
- Offers a streamlined process for re-export and international distribution.
6. Approved Market Scheme:
- Allows certain goods to be imported directly into specific markets without prior customs clearance.
- Facilitates faster distribution and reduces handling costs for approved products.
- Requires adherence to strict regulations and controls.
7. Temporary Import Scheme:
- Enables temporary importation of goods for specific purposes without paying customs duties and GST.
- Catered towards exhibitions, trade shows, and repair activities.
- Goods must be re-exported within the specified time frame.
These are just some of the warehouse schemes available in Singapore. The specific scheme applicable to your business depends on the type of goods you are storing, your intended use, and your desired level of flexibility and control. You should consult Singapore Customs or a customs broker to determine the most suitable scheme.
What is a Bonded Area in Singapore?
A bonded area in Singapore refers to a designated geographical area within which imported goods can be stored, handled, and processed without paying import duties and Goods and Services Tax (GST) until they are released for consumption within Singapore or re-exported.
Critical characteristics of bonded areas:
- Customs supervision: Goods within the bonded area are under the control and supervision of Singapore Customs. This ensures that duties and taxes are paid when applicable and prevents illegal activity.
- Security measures: Bonded areas must meet strict security standards to guarantee the safety and integrity of stored goods. These measures may include physical barriers, access controls, and surveillance systems.
- Restricted activities: Only authorized activities can occur within the bonded area. These activities may include storage, handling, processing, packaging, and repackaging of goods.
How Long can Goods be Stored in a Bonded Warehouse?
The duration for which goods can be stored in a bonded warehouse in Singapore generally depends on the type of bonded warehouse and the specific license held:
Licensed Warehouse (LW):
- Dutiable goods: Can be stored indefinitely with suspended duty and GST.
- LWs are further categorized into subtypes with specific duration restrictions:
- LW Type I: Requires renewal every 3 years.
- LW Type II: Requires renewal every 5 years.
- LW Type III: Requires renewal every 10 years.
Zero-GST Warehouse (ZGS):
- Non-dutiable goods: Can be stored indefinitely with suspended GST.
- ZGS are also categorized into subtypes with specific license renewal requirements:
- ZGS Type I: Requires renewal every 3 years.
- ZGS Type II: Requires renewal every 5 years.
- ZGS Type III: Requires renewal every 10 years.
Specialised Warehouse:
- Overseas goods intended for eventual export May have specific time limits depending on the license and goods type.
Free Trade Zone (FTZ):
- No specific time limit for storage.
- Goods remain under customs control but are exempt from duties and GST until released for local consumption or re-export.
Additional factors that may affect storage duration:
- Lease agreements: The lease agreement between the warehouse operator and the owner of the goods may specify a maximum storage period.
- Specific regulations: Certain goods may have specific regulations limiting their storage duration within bonded areas.
- Permits and approvals: Depending on the goods and intended use, additional permits or approvals may be required with specific timeframes.
General recommendation:
While most bonded warehouses allow for indefinite storage, it’s advisable to consult with the warehouse operator and Singapore Customs for specific regulations and limitations regarding storage duration for your particular goods and chosen warehouse type.
