Most business owners are always looking for ways to reduce business cost and increase efficiency.
In logistics, one cost-saving strategy that may not be on your radar is using a Zero-GST Warehouse Scheme warehouse or also known as bonded warehouse. This storage facility can provide a variety of benefits for businesses, such as reduced business costs, increased security, and simplified customs procedures.
A Zero-GST or bonded warehouse can be beneficial for businesses in many ways but is it really suitable for yours? Here’s what you need to know.
What Is A Bonded Warehouse?
A Zero-GST Scheme warehouse , also known as bonded warehouse, is a designated area approved by Singapore Customs for storing imported non-dutiable goods with GST suspended, Depending on circumstances, a Zero-GST warehouse may be the entire premises, a designated part of the premises, a storage tank or any other places approved by Singapore Customs.
Below are the characteristics of a bonded warehouse:
- Purpose: Reduce upfront costs for imported goods.
- Location: Located at or near ports. Does not necessarily have to exist within Free Trade Zones (FTZs) to operate.
- Governing agency: Controlled by the country’s customs office.
- Type of Goods: As a general rule, you can warehouse any goods except dutiable goods; locally-acquired or locally-manufactured goods; and GST-paid goods.
When Do You Need A Bonded Warehouse?
1. Want to use Singapore as a regional/international hub for imported goods
If you operate an import-export business and you need a Zero-GST warehouse primarily to hub imported goods in Singapore for subsequent re-distribution in the region/internationally. if your goods are also meant for local release, you need a Zero-GST Warehouse to support your business.
1. Want to save the costs of paying duties and taxes
By using a bonded warehouse, GST is suspended upon
- imported into the Zero-GST warehouse;
- traded within the Zero-GST warehouse;
- removed between Zero-GST warehouses; and
- removed to traders registered under the Major Exporter Scheme (MES) and the Approved Third Party Logistics (A3PL) Company Scheme;
They will only do so once these products leave the warehouse for local consumption.
Bonded warehouses help businesses to improve cash flow and reduce administrative costs for your business as GST is suspended. This freed cash flow can be used to meet other more critical demands of the business.
This can be a great option for businesses that:
- Import goods in bulk: Companies who ship large volumes of goods are not subjected to the De Minimis Rule (value of the exempt supplies has to be less than or equal to the average of $40,000 per month and 5% of the total value of all taxable and exempt supplies made in that period).
- Store goods for an extended period: GST is suspended for goods that remain in stock for months unless they are released for local consumption.
- Re-ship their products to another destination country: The shipment will only incur duties and taxes from the and not the warehousing country.
2. Wish to reduce the time and costs needed to deliver the goods to consumers
Most bonded warehouses are located at or very close to ports, so your business can store the goods at the port of entry and distribute them when required. This reduces the pick-up and first mile delivery time across the entire supply chain, leading to significant time and costs savings for your business.
However, some Zero-GST warehouse may be located anywhere in Singapore with larger facility that can accommodate different types of cargoes oversized or overweight cargo.
3. Need a facility to handle different types of goods safely with additional value added services
Bonded warehouses typically offer efficient storage solutions that can meet all businesses’ needs. For example, dry containers, freezers, and temperature-controlled rooms are available in the facilities.
This is invaluable for businesses that have different requirements for their goods, such as perishable items as their goods can be handled and stored safely. Even restricted items are allowed to be stored in these warehouses. As a general rule, you can warehouse any goods except dutiable goods; locally-acquired or locally-manufactured goods; and GST-paid goods.
What value added activity can be done at Zero GST Warehouse?
Generally, value-adding operations intended to make the imported goods ready for the next link in the supply chain are permitted within the Zero-GST warehouse, as long as they do not change the original characteristics of the goods. Licensees are required to seek approval from Singapore Customs before carrying out any operations.
Examples of permitted operations are:
- re-packing where the total quantities of Zero-GST goods are not changed;
- re-packaging, including mixing, sorting, grading, labelling, stamping, etc. for distribution or sale;
- preservation to keep the Zero-GST goods dry, cool or frozen; and
- lubricating, rust-proofing, airing or cleaning the Zero-GST goods.
Bonded warehouses are very secure, with a bond given by the authorities that there will not be any monetary loss after the shipment is released. The warehouse is also under 24-hour CCTV surveillance, so businesses can be assured that their goods are safe around the clock with stock records that accurately monitor the level and movement
They also have no storage time limit, so businesses do not have to re-ship their inventory out to a different warehouse when the storage time runs out. *terms and conditions apply
Leave Your Logistics Needs to The Professionals
At Halcon Primo Logistics (HPL) Pte Ltd, we are a one-stop logistics solutions provider in the Asia Pacific region, with customised solutions for all our customers’ needs. We serve as one-point of contact for their logistics requirements.
HPL is authorised by the Singapore Customs authorities to operate and manage a bonded warehouse in Singapore. Businesses can enjoy all the benefits above, including having a dedicated management team to fulfil the demands of inventory integrity, accurate stocktake, and timely reporting. Get in touch with us today for your tailored business logistical solutions.