You Say Potato, I Say Potato

Definitions Make Differences

In 2009, Proctor & Gamble, whichi is the manufacturer and distributor of Pringles^TM found out the expensive way that Pringles are deemed a potato product subject to the UK 17.5% Value Added Tax.

Initially, Proctor & Gamble successfully argued that Pringles should be exempt from the tax on the basis that the Pringle is a moulded dough product rather than a potato chip product (or potato crisp if you are from the UK) and that the Pringle is made from less than 50% potato ingredients; however, the taxman appealed.

On appeal, the taxman won resulting in back taxes due from Proctor & Gamble for an amount in excess of $150,000,000.  Proctor & Gamble found out that a definition can make a very big difference.

Pringles are made from 42% potato flour with other main ingredients including wheat starch.