Dumb question but whats the diff between GST and SST?
I guess the 'sevices' is the same but how is watch treated differently under 'goods' and 'sales'?
GST (6%) is a tax at every level of the sales process.
1. If a manufacturer sell a product at RM 10.00 the the GST will be RM 0.60, making the cost to distributor RM 10.60 and if the distributor decided to make RM 1.00 profit then the GST will be RM RM 0.06, making the total cost to retailer RM 11.66 and if the retailer decided to make RM 1.00 profit then an additional GST of RM 0.06 will be levied, making total cost to consumers RM 12.72
SST (the sales tax part) on the other hand work like this:
2. If a manufacturer sell a product at RM 10.00 the SST will be RM 1.00, making the cost to distributor RM 11.00 but if the distributor and retailer each decided to make RM 1.00 profit each, they will no longer be levied any Sales Tax making the total cost to consumers RM 13.00
Sent from my SM-N950F using Tapatalk
On the other hand, if the distributors and retailer are making a bigger margin the calculation will favour SST over GST (to the consumers):
1. Manufacturer sells RM 10 + GST RM 0.60, and distributors and retailers adding RM 10 profit + GST RM 0.60, making the price consumers pay = RM 21.20
2. If it is an SST then, Manufacturer sells RM 10 + SST RM 1, and distributors and retailers adding RM 10 profit, making the price consumers pay = RM 21.00
Hence, if the total added value at the next value chain is big, the SST is better for consumers. If the total value added at the next value chain is low, the GST is better. Having said that, a manufacturer can establish a separate trading company and transfer the pricing down the value chain to lower its SST.
Sent from my SM-N950F using Tapatalk