Keells Super absorbs VAT together with suppliers
View(s):By Duruthu Edirimuni Chandrasekera
The Keells Super supermarket chain says it hasn’t passed on any cost increase to consumers as they have come to an agreement with their suppliers to jointly absorb the extra cost as a result of the new Value Added Tax (VAT) of 12 per cent slapped on the supermarkets by last year’s budget.
“We discussed with our suppliers and we’re jointly sharing the extra cost with them; therefore the price to the consumer is the same as the pre-VAT price,” Krishan Balendra President, John Keells Retail told the Business Times.
Supermarkets were affected by the imposition of VAT on large scale wholesalers and supermarkets introduced in the 2013 Budget. It applied to supermarket chains and luxury shopping complexes generating a quarterly turnover in excess of Rs 500 million being subject to Nation Building Tax (NBT) and VAT. Analysts said that this would adversely affect some food, beverage and tobacco sector companies as well as their parent companies.
Mr. Balendra said that during the first two to three weeks (of this tax coming in), there was an impact on availability of shelf goods at their outlets, because suppliers were confused as to how to price their items. “But by end January, it was sorted,” he added, noting that it isn’t an ideal situation, but that they managed to avoid any pricing impact to customers.
Discussing electricity tariff hikes expected by April, he said the company was making representations to the Public Utilities Commission.
“Keells Super has recently opened new stores in Maharagama and at the new KZone Mall in Kapuwatte close to Ja-Ela.” Mr. Balendra said, noting that there were plans to open a number of new stores in 2013.
Supermarket chains like Cargills have also absorbed the VAT charge and are not passing it to customers.
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