Construction

On this page:
Charging GST
When to report GST (time of supply)
Letter of claim versus tax invoice 

Charging GST

In general, you need to charge GST on all construction services. This is regardless of whether the property under construction is a residential or non-residential property.

Where your services qualify as international services under Section 21(3) of the GST Act, you may zero-rate your supply of service (i.e. charge GST at 0%). An example is construction services are supplied directly in connection with land or improvements situated outside Singapore.

For GST treatment on reimbursements, back-charges, tender deposit, damages and out-of-court settlements, please refer to GST and the Construction Industry (English version) (183KB) or GST and the Construction Industry(Chinese version)(269KB).  
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When to report GST (time of supply)

Your provision of construction service usually stretches over a period of time. If your contract provides for payments to be made periodically or from time to time (i.e. progress payment), you need to account for GST at the earlier of the following:

• When payment is received for the supplies; or
• When a tax invoice is issued (prior to 1 Jan 2011) or an invoice (wef 1 Jan 2011).

A retention sum is a specified amount which is withheld at each stage of progress payment and will only be released when your customer is satisfied with the work performed. You need to account for GST on the retention sum at the earlier of the following:

• When payment is received; or
• When tax invoice is issued (prior to 1 Jan 2011) or an invoice (wef 1 Jan 2011).

Prior to 1 Jan 2011, the issue of a “tax invoice” and not any other type of invoice will trigger the accounting of GST.  A “tax invoice” refers to one that contains all the particulars under Regulation 11 of the GST (General) Regulations. 

With effect from 1 Jan 2011, the issuance of any type of invoice will be an event that triggers the time of supply. This includes a tax invoice as well as any document that serves as a bill for payment for supplies made by a GST-registered supplier. An example of such document would be a debit note.

In general, documents such as sales order, pro-forma invoice, statement of accounts and letter/statement of claims are not considered as invoices for GST time of supply purposes.  This is because these documents are often not billing for payments and would therefore not be treated as invoices based on normal commercial practices.

For more details, please refer to the e-Tax Guide on GST: Time of Supply Rules (265KB). 

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Letter of claim versus tax invoice

A letter of claim is usually issued by the main contractor to the property developer stating the works completed as at a particular stage and the respective amount payable by the developer for the work performed. The letter of claim cannot be treated as a tax invoice because it is normally not the final amount which is payable by the developer.

As a contractor, you should issue a tax invoice upon the certification of your work done by your client. You should maintain the “certificate of work done” as documentary evidence to support your GST reporting.

Similarly, a letter of claim received from your supplier (e.g. sub-contractor) cannot be used to support your input tax claim.  
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FAQs