New Customs Amendment Bill Passed

March 2008

New Customs Amendment Bill Passed

A new Customs (Amendment) Bill has been passed in Singapore Parliament on 22 January 2008. The Bill amends the current Customs Act (Chapter 70 of the Revised Edition) and makes consequential amendments to the Goods and Services Tax (GST) Act.

Two key changes in this Customs Amendment Bill which are of significant interest to the business community are highlighted:

1. Issuing of customs rulings

A new Schedule has been added to the Customs Act, providing for the making of customs rulings. The business community can now apply to the Director-General for a ruling on one or more of the following matters:

  • The classification of the goods
  • The country of origin of the goods; and
  • How the goods are to be treated for the purposes of determining the customs duty, excise duty, or both, payable on the goods

This provision brings Singapore closer in line with foreign Customs authorities such as the US and the EU and seeks to provide more certainty for doing business in Singapore from a customs perspective.

Some questions were asked in Parliament about the practical usefulness of the provision. First of all, the ruling process does not state a specific timeframe within which a ruling is to be issued by the Customs authorities. Secondly, the applicant would need to provide extensive information which may be timing-consuming and whose application may not be approved by the Director-General. Perhaps the biggest drawback to the new ruling process is that the rulings can be modified or even withdrawn by the Director-General whenever circumstances change. This somewhat contradicts the ruling mechanism’s purpose of instilling increased predictability for the business community. In response, the Singapore Government has assured that the service standard for issuance of rulings would be further explained by Singapore Customs and that feedback from the business community would be taken into consideration in fine-tuning the ruling process.

2. Abolishment of licensed factory warehouse scheme and introduction of composite license scheme

The licensed factory warehouse scheme, which was enforced solely for the manufacture of dutiable goods, has been abolished in the new Customs (Amendment) Bill. The reason cited by the government was that it overlapped the license scheme for a bottling warehouse. The license to manufacture and bottle dutiable goods still remains under Part VI of the Customs Act and the coverage of such a license has been extended to multiple locations instead of previously one location per license. This is aimed at reducing the amount of paperwork for the business community involved in production and warehousing of dutiable goods.

In addition, a composite license scheme has been rolled out in order to provide more flexibility to operators in terms of structuring their supply chains. A single composite license would be available to any person who intends to carry out two or more of the activities mentioned below:
  • Warehousing dutiable goods;
  • Manufacturing dutiable goods;
  • Bottling intoxicating liquors imported or manufactured in Singapore, or blending, compounding or varying any such intoxicating liquors;
  • Selling goods to tourists and to returning or departing residents of Singapore free of duty; and
  • Storing goods liable to Goods and Services Tax (GST) on import into Singapore without GST payments.

When a composite license is granted, the applicant will not be required to apply for separate licenses for the activities that he/she is involved in. In general, the composite license scheme requires the identity of the applicant, the premises where the licensed activities take place and specification of the activities that would take place within the premises.

The grant of a composite license further seeks to make Singapore a more business-friendly environment for companies to set up shop and reflects the increased complexity of business operations nowadays. Further details pertaining to the application process of the composite license are expected to be disclosed by Singapore Customs in the near future.