You need to account for GST on the supply of construction services in Singapore. If the construction services qualify as international services under Section 21(3) of the GST Act, you may zero-rate the supply.
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Charging GST
You are required 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.
Example: International construction services
A Singapore property developer contracted MC Construction to build a hotel in Beijing.
As the construction service would be performed in Beijing, MC Construction need not charge GST for its supply of construction services.
For GST treatment on reimbursements, back-charges, tender deposit, damages and out-of-court settlements, please refer to
- GST: Construction Industry (English version) (PDF, 285KB).
When to report GST (time of supply)
The provision of construction service usually stretches over a period of time.
Progress payments
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 an invoice is issued.
Retained sums
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 an invoice is issued.
Letter of claim vs. 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.
FAQs
Is a dumping fee at a construction site subject to GST?
For dumping services performed in Singapore, the dumping fee is subject to GST.