When importing goods into Singapore, accurately determining the customs value is crucial for calculating applicable duties and Goods and Services Tax (GST). One method to establish this value is by using the flat rates for freight and insurance provided by Singapore Customs. These rates are particularly useful when the actual freight and insurance charges are unknown or unavailable.
What Are Flat Rates for Freight and Insurance?
Flat rates are predetermined percentages applied to the Free On Board (FOB) value of goods to estimate the cost of freight and insurance. This approach simplifies the valuation process, especially when detailed cost information is not accessible.
When Can You Use Flat Rates?
Traders can apply these flat rates under the following conditions:
- FOB Incoterms: The transaction value is quoted under Free On Board terms, where the seller delivers goods to the port of shipment, and the buyer assumes responsibility for freight and insurance from that point onward.
- Unavailable Actual Charges: The actual freight and insurance charges are not known or are unavailable to the importer.
Singapore Customs’ Flat Rates for Freight and Insurance
The flat rates provided by Singapore Customs are as follows:- Africa, Canada, and USA: 24.5% of FOB value
- Europe: 19% of FOB value
- Japan, Australia, and New Zealand: 19% of FOB value
- China, Chinese Taipei, Korea, Sri Lanka, India, and Pakistan: 15.5% of FOB value
- Myanmar, Thailand, Cambodia, Laos, Vietnam, Hong Kong, Philippines, and Indonesia: 9.5% of FOB value
- Peninsular Malaysia: 5% of FOB value
How to Apply the Flat Rates
To calculate the customs value using the flat rates:- Determine the FOB Value: Identify the Free On Board value of the goods, which is the price paid by the buyer to the seller for the goods delivered to the port of shipment.
- Apply the Relevant Flat Rate: Multiply the FOB value by the appropriate flat rate percentage based on the region of export.
- Calculate the Customs Value: Add the estimated freight and insurance costs to the FOB value to obtain the customs value.
Example Calculation
Suppose an importer in Singapore purchases goods from Europe with an FOB value of SGD 10,000. Applying the flat rate for Europe (19%):- Estimated Freight and Insurance: SGD 10,000 × 19% = SGD 1,900
- Customs Value: SGD 10,000 + SGD 1,900 = SGD 11,900
Important Considerations
- Accuracy: Ensure that the FOB value is accurately determined, as it forms the basis for the customs value calculation.
- Documentation: Maintain proper documentation to support the declared FOB value and the application of flat rates.
- Customs Compliance: Adhere to Singapore Customs’ guidelines and regulations to avoid potential penalties or delays in the importation process.
For professional assistance with customs declarations, valuation, and using flat rates for freight and insurance, contact Declarators:
📞 Call us: +65 6385 2155
📧 Email: group@declarators.com.sg
🌐 Visit: www.declarators.com.sg
