Must I charge GST for work on Singapore residential building project?
REQUIRED PAYMENT: GST is chargeable on all construction services in Singapore, regardless of whether the work is for residential or non-residential properties. — PHOTO: BLOOMBERG NEWS
I RUN a GST-registered construction firm. I have some questions on the GST treatments for the various types of supplies in the construction industry.
Do I have to charge goods and services tax (GST) on my construction services for a residential property project?
Yes, you have to charge GST at the prevailing tax rate on all construction services performed in Singapore, regardless of whether the services are for residential or non-residential properties.
However, construction services supplied in connection with land or improvements situated outside Singapore can be zero-rated.
I was awarded a sub-contract to provide both tile and flooring works for a project. However, my main contractor provided the tiles required for the flooring works. Hence, I will charge my main contractor GST on the net amount payable after deducting the value of the tiles. Is this correct?
You are to issue a tax invoice with GST charged to your main contractor for the gross value of your sub-contract work.
The supply of tiles from your main contractor is a separate supply to you, for which the main contractor should issue you a tax invoice for the value of the tiles if he is GST-registered. You may then claim input tax on the GST charged by the main contractor.
Illustration:
The contract sum of sub-contract works for supplying and laying tiles is $15,000. The main contractor supplies tiles of $8,000 in value to the sub-contractor. The sub-contractor bills main contractor for $7,000 (that is, $15,000 less $8,000). Both are GST-registered.
The sub-contractor is to charge GST on $15,000, although he may deduct the value of the tiles in his billing to the main contractor. If the value of sub-contract works is $15,000, GST of 7 per cent comes to $1,050. The amount including GST is $16,050.
Deducting the value of the tiles of $8,000, the net amount payable is $8,050. The sub-contractor’s output tax is $1,050 and the main-contractor’s output tax is $560. The sub-contractor can claim this $560 as his input tax.
Source : Straits Times - 06 Feb 2008
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