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KINIBIZ Prices falling because of the introduction of the goods and services tax? Yes, and no, we are not mad. That’s because simultaneous with the introduction of the goods and services tax (GST), the old sales and service tax (SST) will be removed.

The SST is generally set at 10 percent while the GST is at six percent come April 1 next year so there should be price reduction of four percent of the base price on which the tax is based.

But that will not be the case for all goods. Some will go up because they were not levied taxes before while others will remain unchanged because the rate of tax incurred is six percent at the moment, for example eating at restaurants.

For others, despite the final product being tax exempt, there could be price increases depending on whether or not it categorised as zero-rated or exempt.

Strangely, only items under the zero-rated list are allowed for claiming back tax on inputs. Those under the exempt list, however, cannot and therefore might try to pass the cost on to the consumer.

On Monday, the Finance Ministry gazetted three orders detailing the over 900 goods and services which will fall under the exempt supply and zero-rated lists when the GST kicks into effect next year.

For the full article, please go to KiniBiz .

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