Budget 2013: Sales Tax Anomaly

In the proposed budget 2013, a number of items have been added to the third schedule of the Sales Tax Act whereby sales tax is charged  by the Manufacturer on the retail price. Another amendment proposed is charging a further 2% sales tax  on taxable supplies to a person who has not obtained a tax registration number. The two amendments together have created an anomaly. If sales tax is being charged at the retail price  by the Manufacturer, then all the tax due, upto the retail price, has already being paid. The tax on behalf of the unregistered person is being paid by the Manufacturer due to its calculation on the basis of retail price. A further 2% tax will amount to double taxation on the same taxable amount. The 2% further tax therefore carries no justification and is unfair and illegal on items listed in the third schedule..

Proposed Rectification
Items in the third schedule of the Sales Tax Act be excluded from a further 2% sales tax on supplies to unregistered persons.