New Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit for Goods) Regulations 2016

The Ministry of Domestic Trade and Consumerism (MDTCC) has introduced new regulations to replace the Price Control and Anti-Profiteering (Mechanism to Determine Unreasonable High Profit) (Goods and Services Tax) Regulations 2014. The Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit for Goods) Regulations 2016 is effective January 1, 2017. A grace period of 3 months from January 1 – March 31, 2017 will be provided to allow businesses to prepare and implement the new regulations. The regulation states the following:

1. Confined to the following items: Food and beverages – All food and beverages used for human consumption or is used in the composition, preparations and preservation of any food and drink; and Non-durable household goods and personal care excluding cosmetics sector - Household goods are defined as non-durable goods that are not intended to last for an extended length of time. Mainly household and personal care products that consumers buy often for daily consumption i.e. toiletries, batteries, broom, candle, garbage plastic bags etc;
2. ii. Businesses are to maintain Mark-up in percentage (%MU) or percentage Margin (%MG) on the first day (the baseline) of a financial year (fy) or calendar year (cy);
3. iii. A formula based mechanism will be applied to determine unreasonable profit. Profit is determined as unreasonably high if the mark-up % or margin % for goods sold or offered for sale on any date in a particular financial year or calendar year exceeds the mark up % or margin % in respect of those goods, as at the first day (the baseline) of that particular financial year or calendar year;
4. iv. For the purpose of the regulation, goods described as goods of the ‘same description’ or ‘same class’ as determined by traders i.e. per SKU or product category as determined by the trader;
5. v. An increase in the %MU or %MG i.e. a tolerance level will be considered provided it is according to the historical data of the %MU or %MG on the first day of the fy/cy over the past 3 years (2014, 2015 and 2016);
6. vi. Applies to the entire supply chain i.e. manufacturers, retailers, distributors and wholesalers. Does not apply to services sector except for food and beverage outlets and hotels serving food and beverages;
7. vii. Cheap sale price / introductory price/ goods are not sold or offered for sale on the first day of the fy or cy / good are sold or offered for sale at price below costs / business operation on the first day of fy/cy are not taken into account for the calculation of the %MU/%MG;
8. viii. Increases in %MU or %MG are allowed due to increase in costs and operation / production efficiencies; and
9. ix. A guideline with details of the implementation of the new mechanism will be developed in the next few weeks ie by early February 2017.

For enquiries, please contact Ms Maygelah Siva of the FMM Secretariat (Tel: 03-62867320 or Fax: 03-62741266/7288 or E-mail: [email protected]).