Service charge

Bishan coffee shop zichar booth imposing 7% GST and 0.1% service charge to everyone’s amazement – Mothership.SG

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Prices in Singapore have certainly increased and a zichar stand in Bishan advertised that it is charging 7% Goods and Services Tax (GST) and 0.1% service charge from August 1, 2022.

This led to widespread bewilderment among customers at Zichar’s booth as a result, Shin Min Daily News reported.

Where is the booth?

The FuLee Seafood stall at 120 Bishan Street 12 block is one of 15 zichar stalls on the island under this brand.

The Bishan outlet put up a sign on July 27 notifying customers of the impending price changes.

However, the notice also states that the 0.1% service charge will only be imposed on restaurant customers.

This led customers to express their dissatisfaction, according to the Chinese newspaper.

They also seemed bamboozled as this could very well be the first zichar stall they’ve come across on the island that imposes GST and service charges, given that only restaurants or those with fancier dining environments would.

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A 67-year-old customer said it was the first time he had heard of a coffee stand charging two fees.

He said he didn’t understand the reason for the service charge and was worried other stalls would follow suit.

He added that he will visit other stalls in the future when the additional fee comes into effect.

Another restaurant, 27, said this was unreasonable as the service would then have to match the new charges.

Another more understanding diner, 60, said the price would still be acceptable if it didn’t rise too much.

Regarding the GST, customers seemed more understanding as they know that it is imposed as long as a business has an annual taxable turnover of more than S$1 million, in accordance with the long-standing regulations of Singapore on the GST.

GST and service charge are different things

Walter Theseira, an associate professor at the School of Business, Singapore University of Social Sciences, pointed out in an interview with Shin Min that service charges are not government taxes, and they are different things.

He said that under current guidelines in Singapore, operators only need to make a clear distinction between price components.

And that’s what FuLee apparently did, according to their new opinion.

The company responds

While imposing both charges on customers of a city center cafe in one fell swoop might seem random, the company has a reason for being – but if convincing, that seems to be another. affair.

Contacted for comment, FuLee Seafood owner Wu Yujiao confirmed that the company’s annual turnover will soon exceed S$1 million per year.

She predicted that this year’s turnover will exceed the threshold, as last year’s turnover was just below this figure.

The company applied for GST registration and received approval from authorities, she said.

Wu added that according to government regulations, the food and beverage industry is exempt from the requirement to display retail prices including GST.

Since food prices at the zichar stalls it operates do not include GST, the company decided to add a service charge element.

Moreover, since the authorities have not stipulated the amount of service fees that companies are allowed to impose, it has decided to charge a symbolic service fee of 0.1 percent.

Wu also said that for bills over S$50, the booth will waive the 0.1% service charge and save customers from dealing with loose change of pennies.

Math

In practice, and to give an example of what a 0.1% service charge means, this means that a dinner bill of S$49.90 comes to S$53.44 when GST and service charges are taken into account.

Without the 0.1% service charge, the bill would be S$53.39, a difference of 5 cents.

The boss added, “Of course, I’m afraid some customers won’t come to visit us in the future and it will affect the business, but there’s no other way.”

She pointed out that the service charge is only 0.1% and unlike the 10% service charge levied at restaurants.

Best photos via Google Maps and Shin Min Daily News