What makes u think China will not cut down the bureaucratic red tape, lower GST
further having waived 25% of import duty...lower than the cost of bribing customs
officials or smuggling charges to clean up the smugglers?
Why would China waive 25% of import duty in the first place?
First, some brush-up lesson on VAT/GST: A value-added tax VAT, like the GST,
Being a tax on consumption, and not on income, the tax system inherently
encourages savings and investments instead of consumption. The tax also has a
self-policing mechanism that discourages evasion, unlike in a retail sales tax system
or an income tax system where it would be relatively easier to evade.
Case study of how GST works in Singapore:
A from Malaysia sells 1 kg of Sotong(squid) to client B in Singapore and A declared
S$2/kg of Sotong at custom. B cleared the custom after paying 7% or S$0.14 GST of
S$2 amount declared per kg. Then B sells at S$10/kg in the market. B makes profit
of S$8/kg. After deducting 7% or S$0.56 GST from the profit of S$8. B makes a net
profit of S$7.44(S$8-S$0.56) paying total GST S$0.70 (S$0.14+S$0.56) for 1kg of
Sotong imported....Singapore Govt collected $0.70 GST per kg of Sotong imported.
Do u think Singapore Govt is smarter by collecting $0.70 in GST than China Govt for giving up this tiny
tax revenue in favor of smuggling? Just what I see around me again.
V4. Swiftlet Keeping Discussions, All About Swiftlet Keeping Industry
Jun 24 2012, 11:49 PM
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