Free Trade Zone (FTZ) usage and customs: Frequently asked questions

A free trade zone (FTZ) is a designated area in Singapore, administered by Singapore Customs, where import duty and Goods and Services Tax on qualifying goods are suspended for as long as the goods remain within the zone, allowing companies to store, repackage, and re-export cargo without upfront duty payment. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.

For a trading company setting up Singapore operations, understanding how FTZs actually work, and how they differ from ordinary bonded warehousing, is central to getting the logistics and cash flow model right from day one. This guide sets out the practical answers, cost figures, and common mistakes as the framework stands in 2026.

What a free trade zone actually is

Singapore has several designated free trade zones, covering major seaport terminals such as those operated by PSA and the Jurong Port, as well as Changi Airport’s air cargo facilities, all administered under the Free Trade Zones Act 1966 and regulated day to day by Singapore Customs. Goods brought into an FTZ from overseas are treated, for duty and GST purposes, as not yet having entered the Singapore domestic market. That means a company can land cargo, store it, consolidate or repackage it, and re-export it without ever paying Singapore import duty or GST on that cargo, provided it never leaves the zone for local consumption.

This is different from goods that clear customs and enter the domestic market, where GST becomes payable at the point of import (subject to schemes such as the Major Exporter Scheme that defer that payment). An FTZ effectively removes the duty and GST question altogether for goods that are only transiting through Singapore as a regional distribution or trading hub.

Who needs to use an FTZ

FTZs are most relevant to companies that physically handle goods moving through Singapore as a regional hub: commodity traders storing bulk cargo awaiting sale, distributors consolidating shipments from multiple Asian suppliers before onward shipment to end markets, and re-export businesses that never intend the goods to be sold into the Singapore domestic market at all. A company that only trades on paper, buying and selling cargo that never physically touches Singapore, generally does not need FTZ storage, though it may still benefit from the Global Trader Programme’s concessionary tax treatment on the trading margin itself.

Conversely, a company that imports goods for sale into the Singapore domestic market, rather than for re-export, generally has limited use for FTZ storage beyond short-term staging, since duty and GST will become payable once the goods clear into the domestic market regardless.

Requirements and practicalities

• Goods stored in an FTZ must be properly declared to Singapore Customs on entry and exit, using the TradeNet electronic declaration system, even though duty and GST are suspended while the goods remain in the zone.
• Storage within an FTZ is typically arranged through the zone operator (such as PSA for seaport zones) or a licensed warehouse operator within the zone, rather than directly with Singapore Customs.
• There is generally no fixed maximum storage period mandated by law for most goods within an FTZ, but zone operators impose their own commercial storage limits and charge accordingly, and Singapore Customs can require goods to be cleared or re-exported if compliance concerns arise.
• Certain activities are permitted within an FTZ without triggering duty, including storage, repacking, grading, sorting, blending (for some commodities), and consolidation for onward shipment; manufacturing or substantial transformation activities typically require the goods to be formally imported and cleared instead.
• Controlled and strategic goods remain subject to their own permit requirements even within an FTZ; FTZ status does not exempt a company from strategic goods control or sanctions compliance obligations.

Cost and timeline

The numerical specifics a trading or logistics company should budget for:

• TradeNet declaration fees: each customs permit declaration through TradeNet typically costs in the range of S$0.70 to S$3 per declaration depending on the permit type and service provider used, a modest but recurring operating cost for high-volume traders.
• FTZ storage charges: commercial warehousing rates within an FTZ vary by operator and cargo type, but typically run from roughly S$15 to S$40 per square metre per month for general cargo storage, with bulk and specialised storage (tank farms for liquid bulk, for example) priced separately.
• Customs bond or security: depending on the nature of the goods and the company’s compliance track record, Singapore Customs may require a security bond, commonly ranging from S$5,000 to S$50,000 for standard traders, higher for excisable goods such as liquor or tobacco.
• Setup timeline: arranging FTZ storage with an operator and setting up TradeNet declaration access typically takes 2 to 4 weeks for a new trading company with its Singapore entity already incorporated.
• Ongoing compliance: periodic Singapore Customs audits and stocktake reconciliations are standard for FTZ users, typically on an annual or risk-based cycle depending on cargo volume and value.

Step-by-step process to start using an FTZ

1. Incorporate the Singapore trading entity. The company using the FTZ needs to be a properly registered Singapore entity able to hold a Central Registration Number with Singapore Customs.
2. Register for Customs’ Central Registration (CR) Number. This is required before a company can lodge TradeNet declarations for goods moving in or out of an FTZ.
3. Arrange storage with a zone operator. Select and contract with the relevant seaport, airport, or warehouse operator running the specific FTZ facility that suits the cargo type and location.
4. Set up TradeNet access. Register for TradeNet, either directly or through a licensed customs broker or freight forwarder, to lodge the necessary permits for goods entering and leaving the zone.
5. Lodge entry declarations. Each shipment entering the FTZ is declared through TradeNet, specifying the goods, quantity, and value, even though duty and GST remain suspended.
6. Manage storage and any permitted processing. Goods can be stored, repacked, consolidated or graded within the zone under the permitted activity rules.
7. Lodge exit declarations. When goods leave the zone, either for re-export or for entry into the Singapore domestic market, a further declaration is lodged, and duty and GST become payable at that point if the goods are entering the domestic market.

Common mistakes and gotchas

• Assuming FTZ status removes all compliance obligations. Strategic goods control, sanctions screening, and product-specific permits (for controlled pharmaceuticals, chemicals, or food products, for example) still apply to goods within an FTZ.
• Confusing FTZ storage with duty-free retail. An FTZ is a logistics and customs mechanism for traders and distributors, not a consumer duty-free shopping concept; the two terms are sometimes conflated by companies new to Singapore.
• Poor stock reconciliation. Singapore Customs expects accurate, auditable stock records for goods held in an FTZ; discrepancies between declared and physical stock are a common trigger for compliance reviews and can jeopardise a company’s Customs standing.
• Treating FTZ storage as indefinite. While there is no universal statutory maximum storage period, zone operators and Customs can require goods to be cleared, and open-ended storage of low-turnover cargo is usually commercially inefficient given ongoing storage charges.
• Overlooking the interaction with GST schemes. Companies that also import goods into the domestic market should coordinate FTZ usage with schemes such as the Major Exporter Scheme to avoid unnecessary GST cash flow drag on goods that are not re-exported.

FTZ usage alongside other Singapore trading structures

FTZ storage is commonly used alongside a Singapore Pte Ltd trading entity and, for companies with sufficient trading volume, a Global Trader Programme award on the trading margin itself. The two are complementary rather than substitutes: GTP addresses the tax rate on trading income, while FTZ status addresses duty and GST suspension on the physical goods. A company setting up a genuine regional trading and distribution hub in Singapore typically needs both pieces in place, alongside appropriately structured banking and trade finance facilities, and staff to manage the logistics and customs declarations, some of whom will need work passes arranged through a licensed employment agency such as our sister company handling S Pass and Work Permit quota management for warehouse and logistics roles.

A worked example

Consider a distributor of consumer electronics sourcing from manufacturers in Vietnam, Malaysia and South Korea, and selling into Indonesia, the Philippines and Australia. Rather than shipping directly from each factory to each end market, the company routes all cargo through a Singapore FTZ facility at one of PSA’s seaport terminals.

Containers arrive from the three source markets and are declared into the FTZ through TradeNet, with duty and GST suspended. Within the zone, the company consolidates smaller shipments bound for the same end market into full container loads, relabels packaging to meet each destination market’s requirements, and sorts stock by product line. None of this consolidation or relabelling activity is treated as manufacturing, so it does not trigger a requirement to formally import the goods. When a consolidated shipment is ready, it is declared out of the zone directly for export to Indonesia, the Philippines or Australia, again without Singapore duty or GST ever being payable, because the goods never entered the Singapore domestic market.

The commercial benefit is straightforward: the company avoids the cash flow drag of paying and later reclaiming Singapore import duty and GST on goods that were never going to be sold domestically, while gaining Singapore’s port connectivity, trade finance infrastructure, and time zone advantage for coordinating a multi-country distribution network. Storage costs at roughly S$20 per square metre per month for the volumes involved, and TradeNet declaration fees for the consolidation and re-export legs, are the company’s main ongoing FTZ-related costs, both minor relative to the duty and GST that would otherwise apply if the goods were formally imported and re-exported through the domestic market.

FTZ compliance obligations that are easy to miss

Beyond the headline duty and GST suspension, companies using FTZ facilities take on a set of ongoing compliance obligations that are easy to underestimate when first setting up. Singapore Customs expects real-time or near-real-time stock records that reconcile to physical inventory, and periodic reconciliation exercises, whether self-conducted or Customs-initiated, need to tie out cleanly. Companies handling controlled items, such as certain chemicals, food products subject to Singapore Food Agency licensing, or pharmaceuticals, need the relevant product-specific permits in addition to the standard TradeNet customs declaration, even while the goods sit within the FTZ. Insurance arrangements also need specific attention: standard cargo insurance policies do not always automatically extend to goods held in bonded or free trade zone storage, so companies should confirm with their insurer that FTZ-held stock is properly covered, particularly for high-value cargo awaiting consolidation or onward shipment over an extended period.

FAQs

Do I need to set up a company inside the free trade zone itself, or can any Singapore company use FTZ storage?
Any properly registered Singapore company, or a foreign company with the right customs registration, can use FTZ storage facilities; there is no requirement to be physically headquartered inside the zone. The zone is a physical customs area for storing and handling goods, not a separate corporate jurisdiction.

Is GST payable on goods stored in an FTZ?
No, GST and import duty are suspended on qualifying goods for as long as they remain within the FTZ. GST becomes payable only when goods leave the zone to enter the Singapore domestic market, not when they are re-exported directly from the zone.

Can goods be processed or repackaged while stored in an FTZ?
Yes, activities such as storage, repacking, sorting, grading, and certain blending operations are generally permitted within an FTZ without triggering duty. Manufacturing or substantial transformation of goods typically requires formal importation and clearance instead, so companies should check the specific activity against Singapore Customs’ permitted-activity list.

What happens if Singapore Customs finds a discrepancy in FTZ stock records during an audit?
Discrepancies can trigger further investigation, penalties, and closer scrutiny of the company’s future declarations, and in serious cases can affect the company’s standing to continue operating within the zone. Accurate, real-time stock reconciliation is essential for any company relying on FTZ storage at scale.

Does FTZ status exempt a company from strategic goods control requirements?
No. Strategic goods, dual-use items, and sanctioned goods remain subject to their own permit and control requirements under the Strategic Goods (Control) Act 2002, regardless of whether they are physically located within an FTZ.

Related guides

See also our guide to the Global Trader Programme (GTP) concessionary tax, the sister-site guide on choosing between sole proprietorship, LLP and Pte Ltd structures, and, for logistics and warehouse hiring, S Pass quota management for trading and logistics employers. For authoritative reference, see Singapore Customs for FTZ and TradeNet procedures, the Inland Revenue Authority of Singapore for the GST treatment of imports, and Enterprise Singapore for broader trading and internationalisation support.

Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.