A) Issue e-Invoices to Sub-Contractors
Would an e-Invoice be required for charges to sub-contractors, including penalties?
Yes, according to the Income Tax (Construction Contracts) Regulations 2007, contractors must issue an e-invoice for charges to sub-contractors.
A sub-contractor is a third party hired by a contractor to perform specific tasks or services as part of a larger project.
B) Progress Claim
What is the e-Invoice treatment for progress claim on a construction of a property?
A progress claim in construction is a request for payment from a contractor to a client for work that has been completed on a construction project.
Progress claims ensure that contractors are paid for work completed, and that the client can assess the work before the project continues:
1. Certification of work done is NOT required
Under the circumstance that a certification of work done is not required, contractor is required to issue an e-Invoice in relation to the progress claim on the construction of property to substantiate the income generated.
2. Certification of work done is REQUIRED
Where a certification of work done is required, the e-Invoice can be issued upon obtaining the certificate.
C) Main contractor purchase materials on behalf of the owner
Under such situation, the main contractor will purchase the materials from vendors / sellers / traders. Thereafter, the contractor will include the said purchases in its progress billing to the owner.
Upon the implementation of e-Invoice, will the same arrangement continue to apply or will the main contractor be required to modify its current processes?
Main contractor is allowed to continue their current billing arrangement. With the implementation of e-Invoice, the invoices issued by the main contractor will need to be e-Invoices.
D) Sell construction materials to related companies
If Company A is mandated to implement eInvoice in Phase 1 of the implementation timeline, should they issue e-Invoices to the related companies?
Yes, an e-Invoice will be required to be issued upon the sale of construction materials to related companies. Note that consolidated e-Invoice is not allowed for the sale of construction materials as defined under the Construction Industry Development Act 1994.