SINGAPORE Law and Practice Contributed by: Benjamin Tay, Chou Ching, Norman Ho, Vikna Rajah, Chun Kiat and Marcus Tay, Rajah & Tann Asia
on-demand bond without establishing breach, subject to the fraud exception. Contractors who seek to restrain an unconscionable call face a high threshold under Singapore law, and the Court of Appeal’s decisions in this area – including on what constitutes unconscionable conduct – are a significant body of jurisprudence that both employers and contractors should understand before entering Parent company guarantees are frequently required where the contracting entity is a special-purpose company within a larger construction group. Escrow arrangements holding a portion of the contract sum are less common but are used for very large or com - plex projects. Letters of credit are occasionally used as an alternative to performance bonds for interna - tional contractors. 7.6 Liens or Encumbrances in the Event of Non-Payment Singapore does not have a statutory construction lien regime equivalent to mechanics’ lien legislation in the USA or builders’ lien legislation in some other common-law jurisdictions. Contractors and subcon - tractors do not have a statutory right to register a lien against the property in the event of non-payment. The primary remedy available to contractors for non- payment is the adjudication process under the Build - ing and Construction Industry Security of Payment Act 2004 (SOPA). Adjudication determinations are typically issued within several weeks of the adjudica - tion application, with the adjudicator required to com - plete their determination within a set period after the adjudication conference. Adjudication determinations are binding and enforceable as judgments of the court unless set aside by the High Court on limited grounds. 7.7 Requirements Before Use or Inhabitation Before any building in Singapore can be occupied or used, a temporary occupation permit (TOP) or a certif - icate of statutory completion (CSC) must be obtained from the BCA. The TOP is granted when the BCA is satisfied that the building is substantially completed and safe for occupation, and it permits occupation into bonding arrangements. Alternative Arrangements
before all works are fully completed. The CSC is the final certificate confirming full compliance with the Building Control Act. In addition to the TOP/CSC, occupiers of commer - cial and industrial premises must obtain the relevant approvals from the URA (for change of use, if applica - ble), the Singapore Civil Defence Force or SCDF (for fire safety certification) and the National Environment Agency or NEA (for environmental licensing, where applicable). Data centres and telecommunications facilities require additional approvals from the relevant regulatory authorities. Occupation without a valid TOP or CSC is an offence under the Building Control Act. Singapore does not impose a separate real estate transfer tax. Instead, transactions may attract GST (for non-residential property) and stamp duties under the Stamp Duties Act. GST at 9% is payable on the sale of non-residential real estate if the seller is GST-registered and the trans - action does not qualify as a transfer of a going con - cern (TOGC). If the sale qualifies as a TOGC under the GST (Transfer of Business as a Going Concern) regulations, no GST is chargeable on the sale. 8. Tax 8.1 VAT and Sales Tax For the sale of residential property, the sale is an exempt supply for GST purposes and no GST is chargeable regardless of the seller’s GST registra - tion status. BSD applies to all real estate transfers as described in 2.10 Taxes Applicable to a Transaction . Sellers and buyers should both take GST advice early in commercial property transactions to confirm the GST treatment and ensure the transaction structure The primary method of mitigating stamp duty on large real estate portfolios is to structure acquisitions as share purchases rather than direct asset purchases, taking advantage of the 0.2% share transfer duty rate compared to the non-residential BSD rate of up to 5% on direct asset transfers. This structural preference is achieves the desired tax outcome. 8.2 Mitigation of Tax Liability
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