The Sales Tax Act entitles only the licensed manufacturer and tax exemption license holders to manufacture and sell produce. However, it does not single out the non licensed manufacturers for discrimination.
The ring system explained below demonstrates how this is avoided:
A Licensed manufacturer can acquire taxable goods, from another manufacturer, free of sales tax
A Licensed manufacturer can import taxable goods free of sales tax
A Licensed manufacturer can transfer taxable goods to another licensee for completion of manufacture and then acquire them back, free of sales tax. This is basically to solve problems of sub-contracting and farming out
A Licensed manufacturer can acquire taxable goods which are deposited or kept in a customs warehouse or a warehouse licensed under Section 65 of the Customs Act free of sales tax
A non-licensed manufacturer can import taxable goods on behalf of a licensed manufacturer free of sales tax
A non-licensed manufacturer can acquire taxable goods from a licensed manufacturer on behalf of a licensed manufacturer free of Sales Tax
|
Goods |
Rate of Tax |
|
Fruits, certain foodstuff, timber and building materials |
5% |
|
For all unspecified goods |
10% |
|
Cigarettes and tobacco |
15% |
|
Liquor and alcoholic drinks |
25% |
|
Petroleum Products |
Rates specified from time to time. |