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Prices in Singapore have been creeping up for sure and one zichar stall in Bishan has announced it is charging the 7 per cent goods and services tax (GST) and a 0.1 per cent service charge starting Aug. 1, 2022.

This has led to widespread bafflement among patrons of the zichar stall as a result, Shin Min Daily News reported.

Where is the stall?

The FuLee Seafood stall at Block 120 Bishan Street 12 is one of 15 zichar stalls islandwide under that brand.

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

However, the notice also said the 0.1 per cent service charge will be imposed only for dine-in customers.

This led to patrons expressing their displeasure, according to the Chinese newspaper.

They also appeared bamboozled as this could very well be the first zichar stall they have encountered on the island that imposes GST and service charge, given that only restaurants or those with more refined dining environments would do so.

Responses by patrons

One 67-year-old customer said this was the first time he has ever heard of a coffee shop stall charging two fees.

He said he did not understand the reason for the service fee and was worried other stalls might follow suit.

He added that he will visit other stalls in the future when the extra charges kick in.

Another diner, 27, said it was unreasonable as the service should then match the new charge.

Another diner, 60, who was more understanding, said the price will still be acceptable if it does not increase too much.

Regarding GST, customers did appear more understanding as they are aware that this is imposed as long as a business has an annual taxable turnover above S$1 million -- in line with Singapore's long-standing GST regulations.

GST and service charge are different things

Walter Theseira, an associate professor at the School of Business, Singapore University of Social Sciences, stressed when interviewed by Shin Min that service fees are not government taxes, and they are different things.

He said under current guidelines in Singapore, operators are only to clearly distinguish between price components.

And this is what FuLee has apparently done, going by their new notice.

Business responds

While slapping both charges on dine-in customers at a heartland coffee shop at one shot might sound random, the business has it rationale -- but whether it is convincing, appears to be another matter.

When contacted for comment, the owner of FuLee Seafood, Wu Yujiao, confirmed that the company's annual turnover will soon exceed S$1 million a year.

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

The company applied to be a GST-registered business and has received approval from the authorities, she said.

Wu added that according to the regulations of the authorities, the food and beverage industry is exempted from showing retail prices that are inclusive of GST.

Since the prices of food at the zichar stalls she operates do not include GST, the business decided to add a service charge component.

Moreover, since the authorities did not stipulate the amount of the service charge businesses are allowed to impose, she decided to charge a symbolic 0.1 per cent nominal service fee.

Wu also said for bills above S$50, the stall will waive the 0.1 per cent service charge and spare customers the need to handle small change of a few cents.

The math

In practice, and to give an example of what a 0.1 per cent service charge translates to, this means a S$49.90 dine-in bill comes up to S$53.44 when GST and service charge are factored in.

Without the 0.1 per cent service charge, the bill will be S$53.39 -- a difference of 5 cents.

The boss added: "Of course I am worried that some customers will not come to visit in the future and this will affect the business, but there is no other way."

She stressed that the service fee is only 0.1 per cent and unlike the 10 per cent service charge levied at restaurants.

Top photos via Google Maps & Shin Min Daily News