Singapore is one of the best jurisdictions in the world to run a dropshipping business. Zero capital gains tax, a 17% corporate rate with generous startup exemptions, excellent payment gateway integration, and a stable legal system make Singapore Pte Ltd the preferred structure for serious dropshippers. This guide covers exactly how to set up, what structure to use, how GST works, and how to handle the accounting.
Dropshipping is a fulfilment model where you take customer orders through your own store or marketplace, then purchase the item from a supplier who ships directly to the customer. You never hold inventory. Your margin is the difference between your selling price and the supplier's wholesale price plus shipping.
Do you need to register a company for dropshipping in Singapore?
Legally, you can dropship without registering a company - but IRAS treats all regular business activity as taxable income, regardless of whether you've registered a formal entity. This means even unregistered dropshippers must report and pay tax on their profits.
Registering a Singapore Pte Ltd is strongly recommended once you're doing meaningful revenue (S$2,000+/month is a reasonable threshold). Here's why:
- Business bank account: Payment processors (Stripe, PayPal, Shopify Payments) require a registered business bank account to operate properly and have higher limits than personal accounts
- Stripe/PayPal business accounts: Both require a company registration for business-level accounts with lower fees and higher payout limits
- Professional invoicing: B2B customers and wholesale suppliers often require invoices from a registered entity
- Limited liability: If a product causes harm or a dispute escalates, a Pte Ltd protects your personal assets
- Tax efficiency: Corporate tax (17% with startup exemptions) is typically lower than personal income tax at equivalent profit levels above S$40,000/year
- Brand value: A registered company builds an asset you can eventually sell - the brand, the domain, the store, and the supplier relationships
Pte Ltd vs Sole Proprietor for dropshipping
| Factor | Singapore Pte Ltd | Sole Proprietor |
|---|---|---|
| Liability | Limited to share capital | Unlimited personal liability |
| Tax rate | 17% corporate (0-8.5% startup) | 0-22% personal income tax |
| Stripe/PayPal business tier | Yes | Limited |
| Sellable as a business | Yes (share transfer) | Harder (no legal entity) |
| Annual compliance cost | S$800-S$1,500/year | S$100-S$200/year |
| Credibility with suppliers | Higher | Lower |
The extra annual compliance cost of a Pte Ltd (S$800-S$1,500/year for corporate secretary + accounting) is typically worth it once your dropshipping profit exceeds S$30,000-S$40,000/year.
SSIC code for dropshipping businesses
When incorporating, ACRA requires you to state your business activity using an SSIC code. For dropshippers:
- 47910 - Retail sale via internet: The standard code for dropshippers selling directly to consumers online (Shopify store, WooCommerce, etc.)
- 46900 - Non-specialised wholesale trade: If your model is B2B (selling to retailers or businesses)
- Category-specific codes: Electronics (47430), clothing (47711), cosmetics (47751), and other categories have specific retail codes if you want to be more precise
Your SSIC code has minimal impact on your day-to-day operations but can affect grant eligibility. Use our SSIC Code Search tool to find the exact code for your product category.
Setting up your dropshipping store
Shopify
Shopify is the most popular platform for Singapore dropshippers. After incorporating, you'll use your Singapore UEN and company name to upgrade to a Shopify Business account. Shopify Payments (powered by Stripe) is available in Singapore for properly registered companies. Key setup steps:
- Register your Shopify store and connect a Singapore corporate bank account for payouts
- Add your Singapore UEN and GST number (if registered) to your store settings
- Configure GST collection: if you're not GST-registered, do not charge GST to customers
- Set up your supplier integrations (DSers for AliExpress, Spocket for Singapore/SEA suppliers, or direct supplier API)
Supplier options for Singapore-based dropshippers
| Supplier | Ships from | Delivery to SG | Best for |
|---|---|---|---|
| AliExpress / DSers | China | 7-30 days | Low-cost goods, high volume |
| Spocket | SEA, US, EU | 3-14 days | Faster shipping, quality goods |
| Printful / Printify | EU, US, AU | 10-20 days | Print-on-demand (apparel, homeware) |
| Modalyst | US, EU | 7-21 days | Fashion and accessories |
| Local Singapore distributors | Singapore | 1-3 days | Fast domestic delivery, premium products |
GST for Singapore dropshippers
GST applies at different levels of the dropshipping supply chain. Here's what you need to know:
Your Singapore company selling to customers
If your company's taxable turnover is below S$1 million, you are not required to register for GST and do not charge customers GST. Most early-stage dropshippers are below this threshold.
Buying from overseas suppliers
Goods imported into Singapore are subject to import GST (9% as of 2024) if their customs value exceeds S$400. If you're dropshipping from China to Singapore customers, goods under S$400 per consignment were previously exempt but are now subject to GST from January 2023.
From 1 January 2023, all imported goods (regardless of value) are subject to Singapore GST when sold to Singapore consumers. Overseas suppliers and marketplace operators above S$100,000 global revenue must register for Singapore GST. This affects AliExpress, Shopify stores shipping to Singapore, and overseas dropship suppliers. If you use AliExpress to dropship to Singapore customers, AliExpress now collects and remits the GST on your behalf. If you use other suppliers, check whether they are GST-registered for Singapore.
Banking for dropshipping companies
You need a Singapore corporate bank account to receive Shopify, PayPal, and Stripe payouts as a business. Recommended options:
- Wise Business: Best for dropshippers with overseas suppliers - you can hold, convert, and send in USD, EUR, GBP, and SGD without conversion fees. Local bank details in 10+ countries.
- Airwallex: Excellent for high-volume dropshippers with multi-currency revenue. Connects directly to Shopify and most payment processors.
- DBS/OCBC: Traditional Singapore bank account for CPF, IRAS payments, and bank transfers. Required for some supplier agreements.
Accounting for a dropshipping business
Dropshipping accounting has a few specific considerations:
- Revenue recognition: Record revenue when you receive customer payment (or when the order ships, depending on your terms)
- Cost of goods: Record supplier cost as cost of goods sold (COGS). If you're using a platform like AliExpress, this is the price you pay per order
- Platform fees: Shopify subscription, payment processing fees (Stripe typically 2.9% + S$0.30/transaction), and any app subscriptions are deductible expenses
- Advertising: Facebook Ads, Google Ads, TikTok Ads - all deductible. Keep invoices/receipts
- Chargebacks and refunds: Record as a deduction against revenue
Most dropshipping founders use Xero or QuickBooks connected to their Shopify store via an integration (A2X is popular). This automates the import of order data into your accounting software.
Tax on dropshipping profits
Singapore's corporate tax structure is very favorable for dropshipping businesses:
- First 3 years: 75% tax exemption on first S$100K chargeable income (effective rate: 4.25%), 50% on next S$100K (effective rate: 8.5%)
- After year 3: 17% flat rate, with the Partial Tax Exemption reducing effective rate on the first S$200K
- No capital gains tax: if you sell your dropshipping brand, store, or company, there is no Singapore capital gains tax on the proceeds
- Dividends: one-tier system means dividends extracted from your company are not taxed again at the individual level
Karman handles incorporation, nominee director (if needed), corporate secretary, and GST registration. Most dropshipping businesses are incorporated within 1-3 days.
Official Sources
Frequently Asked Questions
Not legally required, but strongly recommended once you're making meaningful revenue. A Pte Ltd gives you proper business bank accounts, lower tax rates versus personal income tax, limited liability, and the ability to sell your business as an asset later. IRAS still taxes unregistered business income as personal income.
Only if you're GST-registered. GST registration is compulsory when taxable turnover exceeds S$1 million/year. Below that threshold, you don't charge customers GST. Note that from Jan 2023, overseas suppliers shipping to Singapore consumers may need to account for GST on low-value goods - check whether your supplier handles this.
47910 (Retail sale via internet) is the standard code for dropshippers selling direct to consumers. If you're in a specific product category (e.g., clothing, electronics), a more specific retail code may apply. Karman advises on the right code during incorporation.
Yes. Foreign nationals can own 100% of a Singapore Pte Ltd. You'll need a nominee director if you don't hold a Singapore pass. Singapore has zero capital gains tax, so if you build and sell a dropshipping brand, you keep 100% of the exit proceeds.