1. If you are in the construction business and are GST-registered, you need to charge GST to your customers for the supply of construction services in Singapore. If the construction services are supplied overseas, it will qualify as international services under Section 21(3) of the GST Act. Thus, you can charge GST zero percent to your overseas customers.
2. It is important to noted that all type of construction services supplied in Singapore is subject to GST. This is regardless of whether the property under construction is a residential or non-residential property. For example a Singapore construction company was contracted to build a house in Singapore. As the construction service would be performed in Singapore, the Singapore construction company need to charge GST for its supply of construction services.
3. For construction services that are supplied overseas, it will qualify as international services under Section 21(3) of the GST Act. Thus, you can charge GST zero percent to your overseas customers. For example, a Singapore property developer contracted your company to build a hotel in Kuala Lumpur. As the construction service would be performed in Kuala Lumpur, you need not charge GST for the supply of construction services.
4. Due to the nature of construction industry, construction contracts are often longer than other business deals such as auto dealerships whose contract is complete once the transaction is. Thus, production contracts can stretches over months or even years, and include multiple billings and payments. For this multiple billings and payments over extended periods, 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.
5. Another payment practice common in the construction industry is retention sum. A retention sum is usually provided and withheld at each stage of progress payment and will only be released when the customer is satisfied with the work performed. It acts as a sort of warranty in case something goes wrong or needs to be fixed after the job is completed.
For this retention sum, you need to account for GST at the earlier of the following:
- When payment is received; or
- When an invoice is issued.
6. It is important to note that a tax invoice must be issued to the client, upon the certification of the work done. This certificate of work done must be kept as documentary evidence to support your GST reporting for the tax invoice issued.
7. Please contact us if you are a GST-registered contractor and need assistance to comply with the GST Act for your business. At PL Biz Consulting Pte Ltd, we have the expertise and experienced peopled to guide you on how to equipped your business to meet the requirements of Singapore GST.
