Launched in June 2001, Global Trader Programme (GTP), which encourages global trading companies to use Singapore as their regional base to conduct entire trade-related activities, from procurement to distribution, has been a major success. The programme was a merger of the approved oil trader (AOT) and the approved international trader (AIT) programmes, which started in 1989 and 1990 respectively.
This replacing of AOT and AIT by one comprehensive GTP allowed companies to trade a wider product portfolio of both energy and non-energy products and commodities. Earlier, AOT catered to the energy trading, while AIT was for non-energy commodities such as agri-commodities, chemicals and metals.
Today, more than 270 companies have GTP status in Singapore and enjoy a concessionary tax rate on qualifying trade income. These companies have benefited from Singapore’s strategic location at world’s major aviation and maritime routes, as well as it’s proximity to raw-material and consumer markets.
Global Trader Scheme
To further develop international trade related activities in Singapore, International Enterprise (IE) Singapore has recently enhanced incentives under the GTP. The existing list of qualifying derivative instruments under the programme has been expanded to include all derivative instruments. It will apply to income from qualifying trades in the new qualifying derivative instruments from the year of assessment 2012.
Now, the list of qualifying products and commodities, which will be reviewed periodically, includes:
- petroleum and petroleum products
- agricultural commodities and bulk edible products
- building and industrial materials
- consumer products
- industrial products
- machinery components
- metals and minerals
- electronic and electrical products.
A new sunset clause, March 31, 2021, has also been introduced for the programme. All existing sunset clauses for the GTP enhancements will be aligned to the new common sunset clause at the scheme level (i.e. 31 March 2021). Now, companies can be approved as a GTP company, or as a GTP (Structured Commodity Finance) company, on or before March 31, 2021. The GTP company can enjoy benefits under the various enhancements during their award tenure of up to five years.
IE has incorporated these changes in GTP for strengthening Singapore’s commodity markets, facilitate better risk management among GTP companies and generate spin-offs for the entire financial sector. Rest all provisions of the programme remains the same.
An approved GTP company is granted a concessionary rate of 5 or 10% on its qualifying offshore trading income. The qualifying transactions include principal trades with offshore parties or other GTP status companies on both the buy and sell legs of the transaction.
These physical trades may be:
- offshore – goods does not pass through Singapore
- trans-shipment – transferring cargo from one transport mode to another
- re-export (only non-value added portion of re-export trade qualifies)
For attracting emerging high-growth international trading companies, IE grants them an initial, non-renewable 3-year GTP status. If during this period, the company establishes its global trading network and demonstrate sustainable growth projections, with Singapore as its base, it can apply for the renewable 5-year GTP status.
Who can apply for Global Trader Programme (GTP)
IE has mandated three minimum criteria for a GTP status application:
- substantial physical offshore trading turnover on a principal basis
- significant local business spending attributable to trading activities in Singapore
- employment of professional traders in Singapore.
But importantly, meeting these does not automatically qualify a company for GTP status. Other considerations include:
- company’s overall business plan and economic contribution to Singapore
- use banking and financial services available in Singapore
- use of other Singapore-based services such as trade and logistics, arbitration, and ancillary
- contribution to manpower training and development of trading expertise in Singapore
In summary, the GTP applicant is expected to use Singapore as the regional nerve centre for its principal offshore trading, and a whole range of other business and support activities. These may be:
- market research
- product development
- quality management
- sales planning and marketing
- global procurement
- network services
- strategy formation
- warehousing and freight services
- customer handling
- risk management
- human resource development
Get GTP status for your trading company
Enjoy a concessionary tax rate on your company’s qualifying trade income when you achieve GTP status. Let Rikvin aid you with your Global Trading Programme application.