Construction business expenses in Singapore: the complete guide for contractors and builders

Singapore construction runs on progress claims, certified work and migrant labour, and the tax rules follow that shape. GST applies to every construction service, residential included; it is due on progress payments and retention at the earlier of invoice and payment; a letter of claim never supports an input tax claim; and the biggest people cost after wages is the foreign worker levy rather than payroll tax. Add capital allowances on plant, the outright block on cars, and CPF on local hires, and you have most of the ledger. This guide goes through it category by category, with a verdict for each one before the detail. Every figure is sourced to IRAS, the Ministry of Manpower or the CPF Board in the Sources section, retrieved 10 October 2026.

What this guide covers: GST on construction services, progress payments and retention, letters of claim and tax invoices, materials, subcontractors, foreign worker levies, CPF and SDL, plant and capital allowances, vans, lorries and the car block, staff medical and welfare, repairs and renovation, insurance and fines, and the records and year-end work that tie it together.

The construction ledger at a glance

The rest of this guide walks through each row, and every section opens with its verdict.

Where ExpenseFlow fits

A contractor’s purchase ledger is materials from several suppliers, plant hire, subcontractor invoices after each certification, fuel and site sundries. ExpenseFlow captures each document (email forward, upload or phone), reads the line items and the GST, codes each line with a written reason, and routes anything uncertain to a person before it posts. Its Singapore construction checks are built from the rules on this page: a vehicle cost that reads as a commercial vehicle is coded for capital allowances, a private passenger car cost is flagged as non-deductible with its GST blocked, plant and machinery is flagged for capital allowances rather than an expense line, a rate other than 9% (or an old 7% or 8% receipt) is flagged, and an overseas bill with no GST is flagged for the reverse charge. After approval the bill syncs to Xero with the source document attached, or to QuickBooks Online as a coded bill.

What it does not do: it does not manage progress claims or retention, run payroll, CPF or levies, or file your GST F5. The construction chart of accounts for Xero and for QuickBooks line up with the categories below.

The ExpenseFlow for construction and trade businesses page covers these checks across all five countries.

GST on construction services

You must account for GST on the supply of construction services in Singapore, regardless of whether the property under construction is residential or non-residential ^[1] . Where your services qualify as international services under section 21(3) of the GST Act, for example construction services supplied directly in connection with land outside Singapore, you may zero-rate them ^[1] . The rate is 9% ^[2] ; the Singapore GST guide covers registration and the GST F5 guide the return.

Progress payments, retention and letters of claim

Where a contract provides for periodic payments, GST is due at the earlier of when payment is received and when an invoice is issued, and the same rule applies to retention sums released once the customer is satisfied ^[1] . A letter of claim, issued by the main contractor to the developer stating work done to date, cannot be treated as a tax invoice because it is normally not the final amount payable; issue a tax invoice on certification and keep the certificate of work done as evidence ^[1] . The same applies downstream: a letter of claim from your subcontractor cannot support your input tax claim ^[1] .

Materials and subcontractors

Materials, consumables and subcontract work are revenue costs of producing income ^[3] . Input tax needs a tax invoice addressed to you, or a simplified tax invoice for purchases of $1,000 or less including GST ^[4] . Site sundries bought by staff from hardware stores need a receipt showing the supplier’s GST registration number.

Foreign worker levies

From 1 January 2024 the construction sector monthly levy is $500 for higher-skilled and $900 for basic-skilled workers from non-traditional sources, $300 and $700 for workers from Malaysia, North Asian sources and the PRC, and $250 and $370 for off-site construction; a Work Permit approved without the required certification is charged $900 ^[5] . The construction quota allows 5 Work Permit holders for every local employee earning the Local Qualifying Salary, and at least 10% of construction Work Permit holders must be higher-skilled before basic-skilled workers can be hired or renewed ^[5] . Levies, like wages, are deductible employment costs ^[3] .

CPF, SDL and staff medical

From 1 January 2026, for wages above $750 a month, employer CPF is 17% for employees aged 55 and below, 16% above 55 to 60, 12.5% above 60 to 65, 9% above 65 to 70 and 7.5% above 70 ^[6] . The Skills Development Levy is 0.25% of monthly wages, minimum $2 and maximum $11.25 per employee ^[7] . Medical expenses for employees are deductible up to 1% of total remuneration, or 2% with a portable medical benefits scheme ^[8] . The GST on staff medical is disallowed under Regulation 26 unless the expense is obligatory under the Work Injury Compensation Act or a collective agreement, or is required because of the nature of the work; first aid kits and their replenishment are claimable ^[4] .

Plant, machinery and capital allowances

The company claims capital allowances on plant and machinery in a schedule submitted with its return, choosing a 1-year write-off for low-value assets costing not more than $5,000 (total 1-year claims capped at $30,000 per year of assessment), a 3-year write-off, or the prescribed working life ^[9] . Assets on hire purchase qualify on the instalments paid ^[9] . Excavators, generators, compactors, scaffolding owned outright and site computers sit here; plant hire is deductible as incurred. The equipment guide has the mechanics.

Vans, lorries and the car block

Capital allowances can be claimed on vans, lorries and motorcycles acquired for business use, and goods and commercial vehicles such as pick-ups, vans, trucks, lorries and buses qualify as plant ^[9] . The COE of a commercial vehicle is added to its cost for capital allowances ^[3] , and its running costs (repairs, maintenance, parking, petrol) are deductible ^[8] . Private cars and Q-plate or RU-plate business cars are the opposite: no capital allowances ^[9] , no deduction for running costs even with business use or reimbursement ^[8] , and Regulation 27 disallows the input tax on their purchase and running costs; vehicles outside the motor car definition, such as lorries, vans and motorcycles, claim GST normally ^[4] . The vehicle purchase guide covers both sides.

Repairs, renovation, insurance and fines

Repairs and maintenance are deductible business expenses ^[3] . Renovation and refurbishment of your own premises is a separate Section 14N deduction capped at $300,000 per 3-year period, claimed over 3 years of assessment ^[8] . Insurance premiums are deductible ^[3] . Statutory fines and penalties, including those for site safety breaches, are not ^[3] .

Records and year end

Records are kept for five years, as the Singapore record-keeping guide sets out. For GST, keep every certificate of work done alongside the tax invoice it supports ^[1] . The tax deadlines calendar and the year-end checklist walk the F5, Form C and capital allowance schedule.

Common mistakes

• Treating residential construction as outside GST ^[1] .
• Accounting for GST on progress claims only when cash arrives, after the invoice has gone out ^[1] .
• Claiming input tax from a subcontractor’s letter of claim ^[1] .
• Claiming capital allowances or GST on the site supervisor’s car ^{[4] [9]} .
• Leaving the COE out of a lorry’s capital allowance cost ^[3] .
• Claiming the GST on staff medical costs that are not WICA-obligatory ^[4] .
• Deducting statutory fines for site breaches ^[3] .