What Is a Bonded Warehouse: Benefits and Comparison to Non-Bonded Warehouses in Singapore

A bonded warehouse is a customs-controlled facility where imported goods can be stored while duties and/or Goods and Services Tax (GST) are suspended. In Singapore, imported dutiable goods, such as liquor, tobacco products, motor vehicles, petroleum products and biodiesel blends, may be stored under the Licensed Warehouse Scheme. Duties and GST become payable when the goods are removed for local use or consumption, but not when they are properly exported.

In this guide, we explain the benefits of bonded warehouses in Singapore and their common uses. We also compare them with general warehouses, Zero-GST warehouses and Free Trade Zones. Keep reading to learn more!

What Is a Bonded Warehouse?

In Singapore, a bonded warehouse is a licensed facility approved by Singapore Customs. It stores imported dutiable goods, such as liquor, tobacco, motor vehicles, petroleum and biodiesel blends. 

Duties and GST remain suspended while the goods are stored in a bonded warehouse. These charges become payable when the goods are released into Singapore’s customs territory for local use or consumption. According to Singapore Customs, goods can be stored in a bonded warehouse indefinitely while continuing to benefit from duty and GST suspension.¹

What Are the Benefits of Bonded Warehouses in Singapore?

Bonded warehouses offer more than duty and GST suspension. They can strengthen cash flow, storage flexibility, inventory control, security and distribution efficiency. 

Improved cash flow 

Duties are only paid for when the goods leave the warehouse. As such, importers can focus their expenditure and efforts on essential or additional pre-sale operations, including legal work needed to import their goods. According to recent studies, bonded warehouses have been shown to save about 25–30% of costs due to deferred taxes. 

Long-term storage

Bonded warehouses offer indefinite storage, providing a secure space for your imported goods. The indefinite storage period also means you won’t have to risk shipping your entire inventory to different warehouses when the storage period runs out.

Better inventory management

A bonded warehouse provides businesses with greater flexibility and control over imported inventory. With duty and GST suspended during storage, goods can be released progressively according to customer demand. Businesses can also consolidate stock in one facility before distributing it locally or re-exporting it overseas. This supports optimal inventory levels, improves responsiveness to demand changes and streamlines supply chain operations. 

Safe and secure storage

Bonded warehouses are equipped with facilities to store any type of product for long periods while maintaining their quality. You can rest assured that your valuable goods will be well cared for. On top of that, goods are also fully documented and protected. Bonded warehouses come with advanced security features such as CCTV cameras and fire-fighting systems to ensure safe storage. 

Proximity to ports

These warehouses are often located near major airports and ports, allowing businesses to store goods at the port of entry until they are ready for distribution. This optimises the entire supply chain by reducing lead times and additional transport costs. Furthermore, the risk of potential damage during transportation to the port is also diminished.

Bonded Warehouse vs Non-Bonded Warehouse 

	Bonded Warehouse	Non-Bonded Warehouse
Best suited for	Importers delaying local release or planning to re-export goods	Businesses storing tax-paid goods for local distribution
Tax status	Duties and GST are suspended while eligible goods remain inside	Duties and GST have generally been paid before storage
Goods stored	Imported dutiable goods under the Licensed Warehouse Scheme	General merchandise, locally acquired goods and tax-paid imports
Customs control	Operates under Singapore Customs requirements	Not regulated under the Licensed Warehouse Scheme
Goods movement	Relevant customs permits are required for goods entering or leaving	Normal deliveries generally do not require bonded warehouse permits
Storage period	Goods may remain for an indefinite period	Depends on the warehouse provider and commercial agreement
Permitted activities	Limited activities may be conducted with customs approval	Services depend on the provider and applicable regulations

Bonded Warehouse vs Free Trade Zone (FTZ)

Both options suspend duty and GST, but they support different stages of the supply chain. 

	Bonded Warehouse	Free Trade Zone (FTZ)
Best suited for	Inventory awaiting local sale, regional distribution or re-export	Cargo awaiting quick transhipment, clearance or onward movement
Primary purpose	Longer-term storage and distribution of imported dutiable goods	Entrepôt trade, transhipment and port-side cargo movement
Location	Approved licensed premises that may be located across Singapore	Designated zones around Singapore’s seaports and airports
Tax treatment	Duties and GST remain suspended during storage	Duties and GST remain suspended while goods stay within the FTZ
Storage period	Eligible goods may be stored indefinitely	Liquor and tobacco are generally limited to 30 days*

*Liquor and tobacco under a “through” bill of lading or airway bill are not subject to the FTZ’s 30-day restriction.²

Bonded Warehouse Use Cases

Bonded warehouses mainly support businesses that import, distribute or re-export Singapore’s dutiable goods.

Alcohol and Tobacco Distribution

Importers can store liquor and tobacco until the goods are required for local sale. Duty and GST are only payable on the quantities released into Singapore for local consumption. If the goods are exported directly from the bonded warehouse, no Singapore duty or GST is incurred, provided the relevant customs requirements are met.

Motor Vehicle Imports

Vehicle importers can store imported vehicles in a bonded warehouse before they are sold locally or re-exported. For qualifying Type III Licensed Warehouse operators, certain activities such as servicing, repairs, retrofitting, re-spraying, and the addition or removal of parts may also be carried out. These modifications are permitted provided they do not change the vehicle’s tariff classification or applicable duty rate.

Petroleum and Biodiesel Supply

Petroleum traders can store eligible petroleum products in approved premises or storage tanks. This allows businesses to manage inventory more efficiently by releasing products based on market demand while postponing duty and GST payments.

Regional Trading and Distribution

Businesses can use Singapore as a regional distribution hub for dutiable goods, allowing them to store and trade inventory before distributing it locally or exporting it to international markets. By deferring duty and GST until the goods are released for local consumption, businesses can improve cash flow, streamline regional logistics, and manage cross-border distribution more efficiently.

Third-Party Logistics

Logistics providers can operate Licensed Warehouses on behalf of businesses importing dutiable goods. In addition to providing secure storage, they can manage inventory, handle Singapore Customs documentation, and coordinate the release of goods for local consumption or their re-export to overseas markets.

How to Choose a Bonded Warehouse

Choosing the right bonded warehouse involves more than comparing storage prices. It’s important to consider its licence, location, security, systems and available services.

Confirm the Warehouse Licence

Check that the facility holds the appropriate Singapore Customs licence for the type of goods you intend to store. Dutiable goods must be stored in a licensed warehouse, while imported non-dutiable goods may be better suited to a zero-GST Warehouse, depending on your storage and distribution requirements.

Consider the Location

You may want to choose a bonded warehouse that is conveniently located near ports, airports, customers, or distribution centres. A strategic location can reduce transportation costs, shorten delivery times, and minimise unnecessary handling, resulting in a more efficient and cost-effective supply chain.

Review Its Storage Capabilities

Confirm that the facility has the appropriate storage capabilities for your products. This includes temperature control and fire-safety features, hazardous-goods requirements, storage capacity and handling equipment.

Assess Its Inventory System

You may want to look for a bonded warehouse with a reliable warehouse management system (WMS) that provides real-time inventory visibility. The system should accurately track stock levels, storage locations, Singapore Customs permits, and inventory movements, giving you greater control, traceability, and compliance throughout the storage and distribution process.

Check Security and Compliance

Assess the warehouse’s security measures, including surveillance systems, alarms, access controls and emergency procedures. It is also important to choose an operator with a strong track record of compliance with Singapore Customs regulations and well-documented warehouse processes to ensure your goods are stored and managed securely and in accordance with regulatory requirements.

Evaluate Value-Added Services

Check whether the warehouse operator offers value-added services such as repacking, labelling, sorting, transport or Customs declaration support. If you require these services, ensure they’re permitted under Singapore Customs regulations and can be carried out within the warehouse’s licensing conditions.

Compare the Cost

If the warehouse meets all your operational needs, the final consideration is cost. Consider all associated costs, including storage, handling, permit processing, transportation, insurance and administrative charges. Additionally, evaluate whether the cash flow benefits of deferring duty and GST outweigh the additional operational and compliance costs.

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¹Retrieved from Singapore Customs
²Retrieved from Singapore Customs