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Malaysia Prime Minister and Finance Minister Datuk Seri Najib announced Budget 2014. There is a lot of search on internet about Goods & Services Tax ( GST ). the difference between GST and Income Tax and difference between GST and Sales and Services Tax ( SST ). As there already have info on difference between GST and Income Tax. We will blog about difference between GST and SST.

Usually, Goods from factory will be charge Sales tax of 10% unless it is for export. Dinning in high class restaurant will be charge Services Tax of 6%. It is one stage tax and business cannot claim back tax on item purchase. Thus, factory have to pay whole 10% to government and Services provider have to whole 6% to government.

As Prime Minister used carbonated drink as example. We used to illustrate the difference.

Under existing SST. Manufacturer of Carbonated drink like Coke, Sarsi etc, have to pay 10% Sales Tax to government. When the can reach restaurant. Restaurant charge another 6% services tax. Thus, Restaurant have to pay 6% to government. Actually, consumer paid total 16% (10% +6%)

Illustration 1 :

                               Manufacturer----->wholeseller-------->Restaurant
Selling Price               RM0.36------------>RM0.80------------>RM1.60
Sales & Services Tax RM0.036----------->--------------------->RM0.096
Total SST RM0.132

Under GST. First, the rate will be standard. Manufacturer no longer paid 10% sales tax but 6% of GST. And when the can reach restaurant. Restaurant also charge 6% to consumer. total consumer paid is 12% (6%+6%). It seem GST of 12% less than 16% under SST.

Illustration 2 :

                             Manufacturer----->wholeseller-------->Restaurant
Selling Price                RM0.36------------>RM0.764---------->RM1.53
Goods & Services Tax RM0.022----------->--------------------->RM0.092
Total GST RM0.114

However, as GST is multi stage consumption tax. thus, Restaurant able to claim back 6% paid to manufacturer from government. The effective tax rate is lower.

As RM0.022 is input tax for Restaurant. Restaurant only pay RM0.07 (RM0.092-RM0.022) to government only but not RM0.092 above. Manufacturer will be responsible to pay RM0.022 to government but not Restaurant. Thus, government received total of RM0.092 but not RM0.114 under Illustration 2 above.

Illustration 3 :

                              Manufacturer----->wholeseller-------->Restaurant
Selling Price                RM0.36------------>RM0.764---------->RM1.53
Goods & Services Tax RM0.022----------->--------------------->RM0.092
Total GST RM0.092

Government received total GST of RM0.092 only in stead of RM0.114 under illustration 2 above. This is because Restaurant only pay government net of RM0.07after deducting RM0.022 input tax.It seem GST RM0.092 is lower than SST RM0.132. However, as GST is  multi stage consumption tax. Wholeseller also have to charge 6% GST.

Illustration 4a :
                              Manufacturer----->wholeseller-------->Restaurant
Selling Price                 RM0.36------------>RM0.764---------->RM1.62
Goods & Services Tax   RM0.022---------->RM0.046----------->RM0.097
Total GST RM0.097

After including wholeseller, Total GST received by government is still at RM0.097 is still lower than SST RM0.132. Price of goods RM1.62 still become higher than RM1.60 under SST.

However, as GST is multi stage consumption tax. Raw material supplier also have to charge 6%GST to manufactuer.

Illustration 5a :

                      Supplier--->Manufacturer---->wholeseller-->Restaurant
Selling Price   RM0.18----->RM0.382-------->RM0.81------->RM1.72
GST               RM0.011---->RM0.023--------->RM0.049----->RM0.103
Total GST : RM0.103

It seem total tax received by government under GST amounted to RM0.103 is still lower than SST RM0.132. It seem price of goods RM1.72 is higher than RM1.60 after including tax charges to wholeseller and raw material supplier. It appear that it is a lose-lose situation as government get lesser tax whereas people have to pay higher price for goods. Government only get higher income on charging more item from variety of goods in stead of selected goods of sales tax and services tax previously.

Input Tax credit of GST

Another argument is business able to claim back input tax credit . This is unlike Sales and Services tax

Under the existing sales tax system, businesses cannot recover tax paid on their purchases. The tax is treated as a cost to business. When the business applies a mark-up to that cost, the sales tax is also marked up.

Because sales tax is paid early in the supply chain, by the time the consumer pays the final price of the goods, sales tax has been “marked up” several times, increasing the cost to the consumer at each stage. This is known as tax cascading.

The input tax credit mechanism allows GST-registered businesses to claim the tax that they pay on their purchases as a credit. Therefore, GST does not form part of the cost base of the business and is not included in the mark-up. Businesses will impose GST based on the value added by them at each stage in the supply chain, resulting in the consumer paying a final 6% tax on the purchase price, rather.

We used illustration 4a and illustration 5ab above to see how if business never mark up as they able to claim back input tax credit:

Illustration 4b :
                                  Manufacturer----->wholeseller------>Restaurant
Selling Price                   RM0.36------------>RM0.72--------->RM1.44
Goods & Services Tax    RM0.022---------->RM0.043-------->RM0.086
Total GST RM0.086

Even raw material supplier come into picture. It does change much if trader able to claim back input tax credit

Illustration 5b :

                       Supplier--->Manufacturer---->wholeseller-->Restaurant
Selling Price RM0.18----->RM0.36-------->RM0.72-------->RM1.44
GST              RM0.011---->RM0.022--------->RM0.043----->RM0.086
Total GST : RM0.086

Both selling price and tax received by government remain same if input tax credit taken into account. Theoretically, total tax received by government will be lower to RM0.086 from RM0.132 and price of goods will be lower from RM1.44from RM1.60. Or RM1.53 after including GST. However, will trader like manufactuer, wholeseller, retailer willing to reduced price to take into account of input tax credit?

Both illustration 5a and 5b above indicated that government will received lower tax compare to SST. However, price of goods will be higher if trader never take into account of input tax credit. Price of goods will be lower if trader willing to take into account of input tax credit. Will they?

More info on Budget 2014 :

Budget 2014: Oil and gas sector likely to continue vital role
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763691&fromuid=1950303

Budget 2014: Citation centre will help boost our varsities
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763671&fromuid=1950303

Budget 2014: Support for SME plans
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763765&fromuid=1950303

Budget 2014: EPF welcomes move to raise SP1M contribution
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763667&fromuid=1950303

Economic Report 2013/2014: Trade surplus likely to narrow to RM64.3bil
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=751271&fromuid=1950303

Budget 2014: Expanding Internet access
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763370&fromuid=1950303

Budget 2014 : No more stuffed bras for cancer victims
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763664&fromuid=1950303

Budget 2014: RM3bil soft loans for maritime
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763688&fromuid=1950303

Budget 2014: RM1bil boost for aviation sector
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763679&fromuid=1950303

Budget 2014: Loan ceiling not enough, say traders
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763670&fromuid=1950303

Budget 2014: ‘Romba nandri’ to Indian community
http://mforum2.cari.com.my/forum.php?mod=viewthread&tid=763668&fromuid=1950303

Anti-speculation measures outlined in Budget 2014
http://english2.cari.com.my/forum.php?mod=viewthread&tid=768781&fromuid=1950303

2014财政预算案 : 消費稅Vs銷售稅及服務稅

消費稅所帶來的衝擊大小，物價會否高漲，取決於商家的良心，商家應盡力配合政府，減少消費稅的負面影響。

在現有銷售稅制度下，製造商或進口商需向批發商徵收10%的銷售稅:

插图1

                                     工廠製造------------->批發--------------->零售
售價                             RM0.36------------>RM0.80------------>RM1.60
銷售稅及服務稅         RM0.036----------->--------------------->RM0.096
总稅数 RM0.132

但在後年落實消費稅後，製造商或進口商只能向批發商徵收6%的消費稅，換言之，批發商的成本將會下跌4%，是消費稅制的最大受益者。

插图2

                                     工廠製造------------->批發--------------->零售
售價                             RM0.36------------>RM0.80------------>RM1.60
消費稅                          RM0.022----------->------------------->RM0.092
总稅数 RM0.114

插图1及插图2显示消費稅总稅数RM0.114(RM0.022+RM0.092)比銷售及服務稅总稅数RM0.132(RM0.036+RM0.096)低

“消費稅對消費者有多項好處，包括避免雙重課稅。例如，酒店向製造商購買气水時需繳10%的銷售稅，然後酒店會把這項成本轉嫁到消費者的身上，加上消費者還要被徵收6%的服務稅，所以就被雙重課稅。”

不過，消費稅制度卻允許酒店向政府回扣在購貨時所繳交給製造商的消費稅（即進項稅，InputTax），無需把這項成本轉嫁到消費者的身上，而只是向消費者徵收6%的消費稅，消費者就能夠買到更便宜的气水。

插图3

                                     工廠製造------------->批發--------------->零售
售價                           RM0.36------------>RM0.764------------>RM1.53
消費稅                        RM0.022----------->--------------------->RM0.092
总稅数 RM0.092

插图3显示政府消費稅总稅收RM0.092比插图1銷售及服務稅总稅数RM0.132(RM0.036+RM0.096)低.甚至比插图2总稅收RM0.114低.消费税采行了“消费税回扣机制”，以将消费税回扣给商家.由于零售商能够索回消费税“进项税”（input tax）RM0.022.零售商消費稅只有RM0.07(RM0.092-RM0.022)政府消費稅总稅收RM0.092.工廠製造商RM0.022+零售商RM0.07.

雖然理論上如此，但他懷疑以“利”為本的商家是否會在享有政府回扣進項稅的同時，下調商品價格。

“再者，商家在配合落實消費稅的過程中，所承擔的成本雖可獲政府扣稅，但不排除可能會轉嫁到消費者身上，造成短期的通貨膨脹。”

消費稅層層課稅,批發商也需要付消費稅

插图4a

                                  工廠製造------------->批發--------------->零售
售價                         RM0.36------------>RM0.764------------>RM1.62
消費稅                     RM0.022---------->RM0.046----------->RM0.097
总稅数 RM0.097

插图4a显示在批發商也需要付消費稅下,物價胀至RM1.62.政府消費稅总稅收RM0.097比銷售及服務稅总稅数RM0.132低.

消費稅層層課稅,原料供應商也需要付消費稅.

插图5a
                  原料供應商---> 工廠製造-------->批發----------->零售
售價             RM0.18----->RM0.382-------->RM0.81------->RM1.72
消費稅       RM0.011---->RM0.023--------->RM0.049----->RM0.103
总稅数: RM0.103

插图5a显示在原料供應商也需要付消費稅下,物價胀至RM1.72.政府消費稅总稅收RM0.103比銷售及服務稅总稅数RM0.132低.

雖然層層課稅，政府在推行消費稅（GST）機制上也制定了一套執行監督方式，即強制規定商家必須憑稅務發票（tax invoice）向政府辦理減稅手續，否則無法獲得減稅。

政府將從原料供應開始征收6%消費稅，但工廠、批發及零售商都可以憑稅務發票申領減稅，可以獲得免征收上一層已征收的消費稅，不會加重生產成本。

防消費稅納入生產成本考量到部份不良商家或在生產過程中，將消費稅納入自己的生產成本中，關稅局規定商家須憑發票才能申領減稅，因此可以防範商家擅自將消費稅納入生產成本中，導致物價上漲。

插图4b

                            工廠製造------------->批發--------------->零售
售價                  RM0.36------------>RM0.72------------>RM1.44
消費稅                RM0.022---------->RM0.043-------->RM0.086
总稅数RM0.086

負責消費稅事務官員說，舉例一件商品的售價1.44令吉，在加上6%消費稅後，實際售價是1令吉526仙，消費稅額為0令吉086仙；但是由於這件商品在原料、工廠至批發過程中，已經累積付了0令吉043仙的消費稅，因此在零售階段時所征收的0令吉086仙消費稅，必須減免累積的0令吉043仙，實際消費稅僅0令吉043仙。

插图5b
                原料供應商---> 工廠製造-------->批發----------->零售
售價        RM0.18----->RM0.36-------->RM0.72------->RM1.44
消費稅   RM0.011---->RM0.022--------->RM0.043----->RM0.086
总稅数: RM0.086

如果商家不将消費稅納入自己的生產成本中.物價RM1.44比銷售及服務稅时RM1.60低.政府消費稅总稅收RM0.086比銷售及服務稅时总稅收RM0.132低.可能否?

“從標准稅率的征稅表中，由於消費稅的征收方式有別於其它稅務，因此在層層扣稅後，表面上看消費稅不低，但實際繳付的消費稅額卻相對低廉。”

消費稅不是商家在制定物價時的考量因素，加上商家必須憑發票才能減稅，因此政府落實消費稅並不會影響商家制定物價。

制造批发阶段不课税消费者免忧税款转嫁

http://cforum.cari.com.my/forum.php?mod=viewthread&tid=3274549&fromuid=1950303

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Tuesday, 29 October 2013

GST Vs SST 消費稅Vs銷售及服務稅

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