In this publication we summarize the type of taxes that will apply to tenders in the construction sector…
Cost per tax is the last step to be completed to successfully determine the bid price.
In the following figure, we highlight the item cost because of taxes.
Tax for Construction Contractors – What is a Tax
A tax is a fee or levy that individuals must pay to some agency national, provincial or municipal government, for no direct compensation.
Taxes are used to finance public spending.
They set most taxes based on the amount of annual income.
Countries or their government districts often also impose taxes on estates, inheritance, gift, property, sales, payroll, customs, etc.
In economic terms, taxes transfer wealth from individuals or businesses to the government.
Tax burdens to be considered in the proposal
In general, the Client is not liable for any tax, fee or contribution, whether national, provincial, municipal or foreign, levied on the contractor during performing the contract.
This is a common practice in all contracts, so the bidder must have adequate advice on the type and cost of taxes that apply.
Sometimes the contracting party is also a withholding agent, so it will deduct from each payment the amount that corresponds according to the legal regulations in force for Income Tax, Gross Income Tax and VAT.
We recommend that fiscal costs be studied and set by the accounting department.
In the following post, we developed an example of direct labor calculation for the execution of a reinforced concrete base.
Tax for Construction Contractors – Calculate Man Hours