The Construction Industry Scheme (CIS) is a tax deduction scheme which involves tax being deducted at source from payments which relate to construction work. CIS does not apply to payments made to employees, since payments to employees are covered by the Pay As You Earn (PAYE) system of deduction of tax at source.he CIS regime applies to all payments made under a construction contract, which is a contract relating to construction operations that is not an employment contract. CIS applies where one party is a contractor and the other party is a subcontractor.