Q 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?
A 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.
For more details, please refer to the new e-Tax guide on GST And The Construction Industry available on Iras’ website www.iras.gov.sg
For SME-related enquiries, please visit EnterpriseOne at www.business.gov.sg or e-mail enterpriseone@spring.gov.sg
Source : Straits Times - 6 Feb 2008
