The curious case of the 0.1 per cent service charge
Just before 1 August 2022, a coffeeshop zi char chain announced that it would impose a 0.1% service charge. This decision was reversed within two weeks due to "customers' reactions".While the rate might appear to be absurdly low and not worth the trouble of imposing, this article sugg...
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2022
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| Online Access: | https://ink.library.smu.edu.sg/sol_research/4184 https://ink.library.smu.edu.sg/context/sol_research/article/6142/viewcontent/The_Curious_Case_of_the_0.1_per_cent_Service_Charge.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | Just before 1 August 2022, a coffeeshop zi char chain announced that it would impose a 0.1% service charge. This decision was reversed within two weeks due to "customers' reactions".While the rate might appear to be absurdly low and not worth the trouble of imposing, this article suggests that there was more to the situation than first meets the eye. GST regulations require merchants to list GST inclusive prices unless the goods and services are provided by hotels and F&B outlets that are subject to a service charge. The 0.1% rate is thus explicable as a likely attempt to get around the rules and list GST exclusive prices instead.The IRAS apparently got wind of this, for they updated their guidance within a few weeks to state that the exception would not apply to those who "levy a nominal service charge without genuine business reasons other than to avoid displaying GST-inclusive prices." |
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