GLOBAL TRADER PROGRAMME in Singapore

The Global Trader Programme (GTP), which has been a huge success, was launched in June 2001 with an objective to promote global trading organizations to come and set up their regional base in Singapore and run their trade-related business, be it procurement or distribution. The programme was saw an amalgamation of the programmes named, approved oil trader (AOT), which started in 1989 and the approved international trader (AIT), which was launched in 1990.

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This replacement of AOT and AIT and launching a comprehensive GTP enabled businesses to trade a bigger product portfolio including both energy and non-energy products and goods. Previously, AOT was only meant for the energy trading, and AIT catered to non-energy as it offered agri-goods, metals and chemicals.

As of now, over 270 organizations carry the GTP status in Singapore and take advantage of the concessionary tax rate on eligible trade income. These businesses have gained due to Singapore’s great location and its proximity to consumer markets and raw material.

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To expand the global trade-related businesses in Singapore even further, International Enterprise (IE) Singapore has improved the incentives under the GTP recently. The current list with the eligible derivative instruments that are covered in the programme has been stretched to add in all derivative instruments. It would now apply to income from eligible businesses in the new qualifying derivative instruments starting from the year of assessment 2012.

The list of eligible products and goods would be reviewed at regular intervals and it includes:

  • petroleum and related products
  • agricultural goods and bulk edible commodities
  • building and industrial supplies
  • consumer goods
  • industrial products
  • machinery parts
  • metals and minerals
  • electronic and electrical products

Another good news is that a new sunset clause (March 31, 2021) is introduced for this programme. All current sunset clauses regarding the GTP enhancements would be aligned now to the new sunset clause at the scheme level, that is, 31 March 2021. Now, organizations are permitted to be approved as a GTP company, or as a GTP (Structured Commodity Finance) organization, on or before deadline of March 31, 2021. The GTP companies could enjoy advantages as per various enhancements in their award tenure of up to five years.

IE has made these amendments in GTP for making Singapore’s commodity markets stronger, facilitating enhanced risk management in GTP businesses and creating spin-offs for the complete financial sector.

An approved GTP business is given a concessionary rate of 5 or 10 percent on its eligible offshore trading income. The eligible transactions include major trades done with offshore parties or some other GTP organizations on both buying and selling legs of the transaction.

These physical trades include:

  • offshore – when products do not pass through Singapore
  • trans-shipment – moving the cargo from one mode of transport to another
  • re-export – only non-value-added part of re-export trade is eligible

For bringing in up-coming global trading businesses, IE provides them a non-renewable 3-year GTP status initially. If in this phase, the organization is able to set up its global trading network and shows sustainable projections of growth in Singapore, then it is allowed to apply for the 5-year GTP status which is renewable.

Who can apply for Global Trader Programme (GTP)

There are three minimum criteria as per IE to apply for the GTP status:

  • Considerable physical offshore business turnover on a principal basis
  • Major local business expenditure for conducting trading activities in Singapore
  • Employing professional traders in Singapore

However, just meeting these would not qualify a company for the GTP status. Some other requirements are:

  • Organization’s complete business plan and financial contribution to Singapore
  • Using banking and financial services in Singapore
  • Using other Singapore-based services like trade, logistics, mediation, and ancillary
  • Adding to resource training and developing trading expertise in Singapore

To conclude, the applicant of GTP should be using Singapore as its regional base for conducting its principal offshore business, and other trading and support activities, which could be:

  • Developing products
  • Market research
  • Quality management
  • Planning sales and marketing
  • Global procurement
  • Financing
  • Network services
  • Forming a strategy
  • Warehousing and freight services
  • Customer service
  • Logistics management
  • Risk management
  • Developing human resources

GTP Eligibility Requirements

As per the guidelines of IE Singapore, a business can apply for the GTP in case:

1. It should be a well-established mid – or large-sized international company and it carries on global trade, procurement, and distribution and shipping of the products under the scheme (as explained below);

2. The business should have an international network and should have a decent track record; and

3. The company wants to establish a regional office of its principal offshore trade and other business operations along with their support functions in Singapore such as marketing, business development, planning, finance, treasury functions, administration, and logistics management, etc.

 

To have eligibility for the GTP, some other additional conditions should be met. The company should have a minimum of:

1. An annual turnover of at least $100 million;

2. Local expenses of at least S$ 3 million and

3. Three professionals employed in the trading field. These officials could be either local Singaporeans or even foreigners. These
professionals should be involved in sales, risk management, marketing activities, etc.

QUALIFYING COMPANY

A qualifying company (i.e. a company that will qualify as a Global Trading company) is a company registered in Singapore and either:

  • An approved global trading company
  • A wholly-owned subsidiary (i.e. 100% ownership) of a global trading company.

The qualifying company will receive the tax benefits only on income derived from qualifying commodities.

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