The e-commerce sector in Singapore is booming in a status quo. The strong per capita income and thriving domestic market make opening an e-commerce company in Singapore a worthwhile option. The best part about this business is that it is easy to set up and does not require myriad compliance compared to its offline counterparts. You can pursue an e-commerce business with or without inventory, depending on your business goals and capital. Whatever option you choose, it will be significantly more affordable than its offline counterparts. Therefore, if you are willing to open a Singapore online shopping platform, there is no better time than now.
Why Start an E-Commerce Business in Singapore?
The e-commerce market in Singapore has been on the healthy growth trajectory since the COVID era. Some frontline factors propelling this market include:
- Increased online payment adoption
- Ever-rising preference for web-based shopping
- Access to a diverse product range.
That said, let's take a closer look at the compelling reasons for opening an e-commerce platform in Singapore.
A Thriving Sector
The Singapore e-commerce market is expanding rapidly. It is projected to attain a valuation of US$95.2 billion by 2033. This e-commerce growth in Singapore demonstrates strong per capita income and inclination towards the online shopping.
Changing Customer Preferences
The ease of buying authentic products with minimal legwork is one of the primary reasons customers in Singapore are increasingly relying on e-commerce platforms. Additionally, the availability of a diverse range of products at your fingertips makes e-commerce an appealing option for a large customer base.
Strong GDP growth and low unemployment rates further enhance consumer confidence, driving demand for diverse online offerings and seamless purchasing experiences.
Trends in the Market
The demand for eco-friendly products and authentic brands has increased significantly in the past few years. Social media propels this shift by encouraging customers to make impulse purchases, reshaping engagement with the brand. Additionally, the use of AI and data analytics has significantly improved the customer satisfaction by offering tailored recommendations based on individual preferences.
Local Special Circumstances
Singapore’s strategic location empowers the e-commerce market through world-class shipping and distribution. Moreover, the strong internet presence makes it easier for e-commerce businesses to target tech-savvy buyers, who constitute a majority of the customer base.
Supportive Startups Ecosystem
Singapore’s dominance in international trade and its financial prowess have paved the way for a thriving ecosystem that equally supports startups and established businesses. On top of that, its favorable fiscal policies, coupled with significant tax exemptions, open the door to substantial growth across diverse industries, including e-commerce.
Steps to Start an E-Commerce Business in Singapore
To start an e-commerce platform in Singapore, you have to follow these simple steps:
Step 1: Enquire with BSW
To start an e-commerce business in Singapore, the first step is to complete an online application form on the BSW website.
Step 2: Personalized Consultation
Upon reviewing your query, our team will contact you using the communication details you provided and help provide a customized solution for your requirements.
Documents Required to Start an E-Commerce Company in Singapore
You have to submit the following documents to run your e-commerce business in Singapore:
- Company Name Approval (via ACRA BizFile+).
- Details of Shareholders, Directors, and Company Secretary (at least one director must be ordinarily resident in Singapore).
- Registered Local Address of the company.
- Constitution of the Company (formerly known as Memorandum & Articles of Association).
- LLC agreement (in case you want to opt for LLC in Singapore)
- Identification documents:
For locals: NRIC
For foreigners: Passport copy and proof of overseas residential address.
- Detailed business plan
- Passport copies of shareholders or directors
- Address proof of shareholders or directors
Cost of Establishing an E-Commerce Business in Singapore
The expenses involved in establishing an e-commerce business in Singapore depend on the chosen business activities and the chosen structure. For a detailed understanding of the setup costs, consult our business experts.
Understanding Singapore E-commerce Taxes
E-commerce taxes in Singapore can be complex to understand, especially for new entrepreneurs. Here’s all you need to know about Singapore’s e-commerce tax rules:
According to the Singapore tax laws, the corporate tax rate is set at 17%. You must file the required documents, including Estimated Chargeable Income or ECI, within three months after the completion of your business’s financial year.
Income Tax on Digital Services, including Dropshipping
Self-employed individuals facilitating digital services (including website building, social media marketing, and app development) or running a dropshipping e-commerce store can be subject to income tax if:
- Their aggregate yearly income exceeded S$6,000
- Their combined net trade income and annual taxable income exceeded S$22,000.
No Taxes on Foreign Income
No taxes will be levied on income generated outside Singapore’s territory. However, if such income is repatriated to Singapore, taxes may be applicable.
GST on Supply of Goods and Services
The GST in Singapore is set at 9% and applies to annual revenue exceeding S$1 million. On top of that, if you are also involved in the importation of goods and services, you still have to pay GST.
Digital Products are No Longer Tax-free
According to Singapore tax rules, the sellers of e-books and software are no longer exempt from GST. They must abide by the standard GST rate regardless of the market they address.
Excise Duty on Alcoholic Beverages
The excise duty is a tax rate calculated on the basis of the alcohol content (liters of pure alcohol (LPA)) in a specific beverage. Currently, the excise rate ranges from S$16.00 to S$88.00 per liter of alcohol, depending on the type of alcohol.
Withholding Taxes (WTH) On Royalties and Technical Fees
E-commerce businesses can be subject to withholding taxes on payments made to overseas clients, including, but not limited to:
- Royalties
- Technical service fees
- Rental of movable property
WTH in Singapore ranges from 10% to 15%.
GST Registration Under Overseas Vendor Registration (OVR) for Non-Resident Business
GST registration under the OVR regime is mandatory for foreign businesses operating in a non-Singaporean market and selling products to non-GST-registered individuals in Singapore, provided:
- Their annual turnover surpasses S$1 million
- The B2C supply of remote services (whether digital or non-digital) or low-value goods (LVG) exceeds S$100,000 annually.
Why Choose Us?
Business Setup Worldwide collaborates with business owners and investors to help them establish offshore business units in reputable jurisdictions. Our experts are well-versed in offshore company formation in Singapore and can offer tailored options to meet your requirements. If you plan to start an offshore e-commerce business in Singapore, don't hesitate to consult with one of our specialists. Contact us today; we are eager to assist you!
