Sunday, May 18, 2008

GST-inclusive price


I have been paying attention to the numerous huge advertisements by the many industry players in the red hot lasik market in Singapore. Prices of lasik is definitely on a downtrend and possibility of hitting sub-$1,000 per eye for standard lasik is very real. (someone told me the limit has been breached already)

In today's national paper, I notice a lasik provider has now included the GST-inclusive price of $2,341.16 into the advert albeit in a smaller font size.

In the heat of competition, perhaps many have forgotten the small detail of the need to place GST-inclusive prices.

What is the Law?
According to reg 77(1) of GST regulations, "where a taxable person publicly displays or advertises the price of any supply of goods and services he makes, or intends to make, it has to be the "GST-inclusive" price.

Any exception to this law must be approved by IRAS.

Edgar says...
While such taxable persons may not be sufficiently in tune with all details, I wonder whether the advertising agents or media owners should play a role in removing such "printing errors or omissions".

Monday, May 05, 2008

Cake or biscuit = GBP3.5m error

Situation
Under UK tax rules, most traditional bakery products such as bread, cakes, flapjacks and Jaffa Cakes are free of Value Added Tax (VAT).

But the tax is payable on some other items eg. cereal bars, shortbread and partly-coated or wholly-coated biscuits.

The confusion arose when the Authority is not sure when a CAKE is not a bread or when a BREAD is actually a cake etc etc etc....

Customers of Marks & Spencer in UK, who had been paying VAT for the last 20 years for a product called "teacakes" realised recently that VAT should not have been applied on the product. How come? The authorities have accepted the product was actually a cake, which does not command VAT!!! A mistake realised after 20 years.

Conclusion
This incident serves to explain why the Government has chosen not to heed calls from some quarters to apply a lower GST rate on necessities.