Price increases by Restaurants, Bistros and Coffee Shops

07/01/2016 16:29

The Consumer Council of Fiji is informing consumers that they should expect price increases for food and beverages in Service Turnover Tax (STT) registered restaurants, bistros and coffee shops.

In recent days consumers have been either lodging their complaints or seeking clarification from the Council in regards to increase in the price of food and beverages by well-established businesses. Complaints were lodged against Wishbone, ROC Café, and McDonalds for increasing prices which are not in line with VAT reduction.

Consumers are informed that from 1st January 2016, all restaurants, bistros and coffee shops which are registered with Fiji Revenue and Customs Authority (FRCA) for STT have started charging STT at the rate of 10%. This is an increase in the rate by 5%   compared to last year.

STT registered restaurants, bistros and coffee shops with turnover above $1.25million will be charging 9% VAT, 10% STT & 6% Environmental Levy. Thus, consumers are expected to pay a total tax of 25% as compared to 20% paid previously.

Before, the STT threshold for registered restaurants was $1.5 million where consumers were paying 15% VAT & 5% STT only. With the changes in the taxation system from 2016, consumers will now be paying 5% more on the food and beverages they consume from these outlets that resulted in price increases.

Restaurants, bistros and coffee shops registered for VAT only with FRCA and having turnover below $1.25 million, can only charge VAT. These service providers cannot charge STT to consumers.

So all VAT only registered restaurants, bistros and coffee shops should have reduced their food and beverage prices by 6% with reduction in VAT from 15% to 9%. This means that consumers will be able to save 6% on food and beverages from non STT registered entities.

Service providers are reminded to make appropriate adjustments to the prices of food and beverages sold in their restaurants in accordance with the new taxation.

Restaurants, bistros and coffee shops which are not registered for STT at FRCA, should not increase prices on the basis of an increase in STT.

In the meantime, the Council has requested FRCA to release the names of STT registered restaurants, bistros and coffee shops for consumer information and to prevent non STT registered enterprises from increasing prices.

Consumers are urged to lodge complaints with receipts to the Council, Fiji Commerce Commission or FRCA against service providers who fail to comply with new tax regime.