This week, Daiso put up notices at its stores that “All prices will be exclusive of GST from 1st May 2022”. Alas, they will be our favourite “$2 always” store no more.
Looking at this move alone, it isn’t surprising. Inflation has been ramping up in the past two years – mainly due to global COVID-19 measures disrupting supply chains, as well as the recent Russian invasion of Ukraine driving up prices of certain commodities.
In Singapore, the Consumer Price Index (CPI) for all items spiked 4.2% in the first two months of 2022. In the whole of 2021, the CPI for all items rose 2.3%. Before this, the CPI for all items was relatively flat in the rest of the decade since 2012.
Feeling the pinch, Daiso, like many other businesses have reacted by raising prices.
GST To Increase To 8% In 2023 And 9% In 2024
Rather than increase its price from $2 to some other number, Daiso’s notices simply state that prices will now be exclusive of GST. In effect, prices will be raised to $2.14 from 1 May 2022.
The way it has framed its price increase also allows it to further increase prices to $2.16 in 2023 and $2.18 in 2024 – without having to make any more announcements. This is because the government already announced in Singapore Budget 2022, that GST will be raised to 8% in 2023 and 9% in 2024.
At the same time, the words it has used on its notices also make it seem that it is still charging $2 – just that it excludes GST now. However, come 1 May 2022, it might not be legal for Daiso to simply state that prices “are exclusive of GST”.
Read Also: When Must A Company Register For GST, And How You Can Register?
Daiso Might Potentially Be Displaying Prices In An IlLegal Way
According to IRAS “GST-registered businesses must show GST-inclusive prices on all price displays (e.g. price tags, price lists, advertisements, publicity brochures, website)”.
Reading this, it is quite clear that Daiso needs to state that its prices are $2.14. If Daiso does what it has implied in its notices – to simply state that “all prices will be exclusive of GST” come 1 May 2022 – it might be running afoul of the laws governing how prices have to be quoted.
In fact, IRAS makes it explicitly clear on its website that an unacceptable practice is for businesses to state that “Prices are exclusive of GST”. This is the exact phrasing that Daiso has used in its notices.
On its website, IRAS also states that the only concession to this is for businesses that are in the Hotel and Food & Beverage (F&B) industries, as they also charge service charge. It’s perhaps for another article to debate whether they should simply make prices known upfront – inclusive of both service charge and GST.
How IRAS Says That Companies Must Display Prices
According to IRAS, prices must be quoted, whether written or verbally, with GST already included. This is because “the public needs to know the final price they have to pay upfront”.
It also depicts very clearly what are acceptable ways to display prices (and what isn’t).
If Daiso wants to play up the fact that its prices are still $2 without GST, it has to be more explicit by displaying both GST-inclusive and GST-exclusive prices. The GST-exclusive prices also cannot be more prominent that then GST-inclusive prices.
Businesses that go against these practices can, and have been, fined $5,000 by IRAS.
Top image from Daiso Singapore Facebook Group.
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