Supermarkets pass VAT burden to suppliers

21 January 2013 03:19 am - 2 - {{hitsCtrl.values.hits}}

A A A

In a dramatic turn of events, the non - VAT (Value Added Tax) paying smallscale suppliers are to step up their collective bargaining power against leading supermarket chains in the country, for urging them to absorb the 12 percent VAT imposed by the Budget 2013.

To this effect, for the first time in the country’s history, these suppliers have united as a single association in a bid to make a stronger claim.

Last week Mirror Business ran a story quoting a top executive of a company which owns a supermarket chain saying—on the grounds of anonymity— that almost all of the retail chains operating in the country have decided to absorb the additional costs originating from VAT by themselves.

However, speaking on the unjust and arbitrary action by the retailers, a supplier on condition of anonymity said that starting from January 01, all the non-VAT suppliers were selling the products to the retailers at 12 percent less than what was charged prior to that.

“Essentially speaking we now sell a product worth of Rs.100 before, at Rs.88. We are not VAT liable and the supermarkets want us to bear the full brunt of the VAT which is unsustainable as it squeezes our margins. We cannot increase our prices either because the competition will send us out of the market,” he pointed out.

Meanwhile Mirror Business learns that letters sent by the supermarket chains for these non-VAT paying small scale suppliers who are in thousands and (in collective) fill the bulk of shelf space have been worded in an unfair manner.

One letter read, “…the percentage of VAT impact to our business (supermarket) which needs to be compensated by your company (supplier) for us to be viable to carry your product range in our retail business”.

Meanwhile another letter sent by another leading supermarket chain to its smallscale suppliers read: “The present weighted average margin given to us by your company (supplier) is 20.24pc, and we require a further 12 pc to offset the impact of the VAT”.

Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

Comments - 2

Who Cares Monday, 21 January 2013 06:45 AM

At the end poor Sri Lankans will have to bear the VAT burden which goes into finance Lamboginis, globe trotting politicians and inefficiencies of the government.

bushel Monday, 21 January 2013 09:43 AM

can some one say for example what I bought for Rs.100/= how much or what will be the new price with this VAT and this and that?

Add comment
Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Supermarkets pass VAT burden to suppliers

Comments - 2

Add comment

RECOMMENDED

UDA owned land in Thalawathugoda; UDA Minister Prasanna Ranatunga under the spotlight for forceful occupation of reserved land

Loss-making SMIB faces political pressure in recovering loans

Baltimore Bridge Collapse: MV Dali, SL authorities anchored in mystery?

Has Sri Lanka become a potential hub for the illegal wildlife trade?

Spotlight on Moragahakanda Development Project Moragolla villagers lose livelihoods and down to one meal a day

Ambitious Sri Lankan jobseekers ‘trafficked into Ukraine war zones’

Western purple-faced langurs see blue!

Most Viewed in News

Sri Lankan among NASA’s new crew for next simulated Mars journey

Racing event tragedy leaves seven dead including eight-year-old child

Street food vendor arrested for verbally harassing foreigner

Two racing drivers arrested over Fox Hill tragedy

A US “Kaputa”, a Lankan “Nariya” and a Presidential “Feast”

Ranil Wickremesinghe caravan moves on despite barking dogs

MIRROR CRICKET

TODAY'S HEADLINES