Wednesday, 13 January 2010

GST - Explaining input-tax with sex, blowjobs and handjobs

Internet has been down at home for a few days so I am glad that I finally get to post this up after cracking my head thinking about the best possible way to explain it. I am sure the title got your attention already…

Anyway, is this your current understanding on GST…?

Manufacturer sells goods to distributor, charges 4% GST and pay to govt. Distributor sells goods to wholesaler, charges 4% GST and pay to govt. Wholesaler sells goods to retailer, charges 4% GST and pay to govt. Retailer sells goods to consumers, charges another 4% GST and pay to govt. Hence, there is a compounding effect.

If that is your current understanding, please be informed that your understanding is wrong.

There will not be any compounding effect due to this component in GST which I have mentioned earlier, known as Input Tax Credit (“ITC”). It works like this…

Manufacturer sells goods to distributor for RM100, charges RM4 GST and pay to govt --- correct.

Distributor sells goods to wholesaler for RM200, charges RM8 GST. However, distributor does not pay RM8 to the govt. The RM4 GST he suffered when he purchased the goods from the manufacturer is known as “Input Tax”, and is allowed as a refund, hence known as ITC.

The amount of GST payable to the govt by the distributor is the amount of GST collected from the wholesaler less the GST suffered when he purchased the goods from the manufacturer. The amount is RM4 (i.e. RM8 – RM4).

There on, wholesaler sells goods to retailer for RM300, charges RM12 GST but only pay RM4 (RM12 – RM8) to the govt.

Retailer then sells goods to consumers for RM400, charges RM16 GST but only pay RM4 (RM16 – RM12) to the govt.

If you are able to understand the above, you will realise that parties in the supply chain will not suffer any tax at all. The ultimate payer of GST (RM16 in the above scenario) is consumer, i.e. us.

Yes, I know it’s confusing and complicated. Hence, I have finally thought of a very sexciting way of explaining it. But before you go on, I urge you to read the
3 basic points of GST which I have written earlier.

Consider this scenario… there is a prostitute called Ms Prost and she provides 3 types of services. Her services are the 3 elements of GST I mentioned earlier. Ms Prost’s services are:-

Full sexual intercourse --- taxable supply
Blowjobs --- exempt supply
Handjobs --- zero-rated supply

Provision of sexual intercourse as taxable supply
Let’s say Ms Prost charged $500 for a session, her client paid her $500 plus GST of $20 (assume GSt rate is 4%). In providing this service, Ms Prost used a condom and she paid for the hotel room. Her total condom and hotel cost was $150. Hence, she has suffered GST of $6. This GST of $6 that Ms Prost suffered is her ITC and is available as a refund.

The amount of GST Ms Prost remitted to the govt is $20 - $6 = $14. In a taxable supply, the consumers suffer the GST.

Provision of blowjobs as exempt supply
Poles getting blown by Ms Prost will only have to pay blowjob fees. There will not be any GST because blowjob is an exempt supply, i.e. exempt from GST. In an exempt supply, ITC is not allowed. Let’s say Ms Prost bought tissue to wipe her mouth and antiseptic gargle and clean her mouth costing $50 and paid GST of $2. That $2 will not be available as a refund.

Therefore, in an exempt supply, the consumer will not suffer GST. It’s the layer just before the exempt supply that will suffer GST. In Ms Prost case, what do you think she will do? Yes, she will just charge extra $2 in blowing the poles. Now think of what corporations in Malaysia will do in relation to the so called “exempt supplies”.

Provision of handjobs as zero-rated supply
Ms Prost charged a pole $100 for pumping him till lotion cum. GST is levied but the rate is 0%. In effect, no GST is paid by the pole. In a zero-rated supply though, ITC is allowed. Since Ms Prost used hand-cream to make her hands soft and KY jelly to lubricate the pole during handjobs costing $25 and suffered GST of $1, she claim a refund of $1 from the govt.

Therefore, in a zero-rated supply situation, the GST mechanism disappears. No one pays GST. Essential goods such as nasi-lemak, char-kuey-teow, bak-kut-teh foodstuff is a zero-rated supply.


You might ask… what about the lingerie that Ms Prost wear, the make-up, the perfume and other costs that she incurred and suffered GST and these costs are related to her 3 superb business lines? Well, apportionment will have to be done to determine the appropriate amount of ITC.

I hope you now have a better understanding of ITC and how it exists in a blowjobs and handjobs…I mean taxable supplies, exempt supplies and zero-rated supplies.


2 years ago…
I am off

32 comments:

day-dreamer said...

Ok lah, I understand abit abit. LOL.

April Ng said...

Still confusing.. but i darn like yr idea putting into sex scenarios..If only my add mathes teacher could think of this way to teach the students..

Ninja Coffee said...

You said it right!
The title sure got my attention

Anonymous said...

i guess we will never be able to fully understand it like you expert. but darn funny hahahahahaha.....!!!!!!!!!

MKL said...

Ok, I need a cold shower now, zewt. You're such a GST sexpert, lol.

deusXmachina® said...

i have understand about GST before this...
but now....

MORE UNDERSTAND!!!!

erk888
great article zewt!

Anonymous said...

this means malaysia sucks...australia good....simple la....like that also dun understand ah...hahaha

eiling lim said...

Funny thing is, I understand the earlier GST explanation and not the sex-blowjob-handjob part. Hmm... anyways, I'm very sure the consumers would be facing inflated prices no matter how we understand the basics of a GST. There are many people out there whom are still ignorant.

beetrice said...

LOL...brilliant way of 'sexciting' it, as you call it...love the analogy! :D i more teh understanding it now...haha...

Anonymous said...

How the hell did you think of that? Haha. Thanks for the sexciting explanation.

Anonymous said...

Shh shh..don't let the kids read this post..

InjusticeSistem said...

Dude, after reading this piece im so turn off by sex already. Everytime i get meself some KY/condom or go to a hooker, my mind will be thinking of how much additional tax im giving to the corrupted govt. How can i enjoy sex knowing im contributing to the currupted politician to buy more mercedes n keep more mistresses.
Damn! There is no escape being tax by corrupted politician, now they even hv their dirty corrupted hands in the sanctity of my sex life. Fuck! The more I thk abt it, eventually they'll start taxing me even when i masturbate....hahahaha

Terra Shield said...

Oh wow... that's a pretty cool explanation, Zewt. Thanks.

I suppose we can safely make the conclusion, that whatever the scenario, the final user (ie: us) is gonna get screwed.

Anonymous said...

terra,

go get screwed in australia...u will take it better from a white man....u might think its social welfare....hahahah

friendly banter la...dun get pissed off..lol

Jane Sunshine said...

Hi Zewt, not sure if you remember me but you used to stop by my blog - janesunshine.blogspot.com.
I need a favour from you- some advice about an auditing firm in Msia, one of the big 4. Can I drop you an email about this?

Anonymous said...

Zewt yr explaination is very different from wat i know abt GST.

In Spore GST only apply to business that hv 1 million dollar and abv transaction. Companies tat does not hv such value transaction cannot register as a GST company and thus cannot charge GST.

The 3 type of GST:
1. Standard rated GST
Apply to any transaction takes place in the country that implement the GST system (eg.M'sia). Consumer normal cannot claim back the GST paid becoz they are not a GST register entity. But for GST register companies they can claim back the GST eg. when a company buy goods, they paid GST and when they sell, they collect GST. GST collected on behalf of government will offset GST paid and the balance will be paid to government.
2. Zero rated GST
Any transaction/deals/sales incur by the company but does not takes place in the country implementing GST will be zero-rated. Eg. When you sell goods to overseas customer. Your factory maybe in China & your customer is in US. When u arrange a direct shipment from China to US, the goods does not come in to M'sia, so it will be zero-rated. Anthr eg. if u sell goods within a company group, normally they will register as Group GST. So u dont hv to pay gst becoz they're under the same grp registered acct.
3. Exempted GST
This apply to the category specify by the government. In Spore medical fee is consider exempted category. Meaning no GST apply at all.

Hope the abv can provide a better picture.

Anonymous said...

bugger u all,

talk so much for what...just pay the damn tax....dun like then go australia.....dun like to pay tax then kill urself....problem settle...kee see la!

j_yenn said...

I can't understand what you've written. Pictures too distracting :P

Life for Beginners said...

Can I be honest and say I understood very little of this? :P

But in addition to my small brain, I've been really tired with work travel and moving house... but I WILL try to read this again when I am more conscious...

(But somehow I think I also still won't get it. LOL)

missironic said...

Hahahaha.. wat a way to explain. I think I get it.. Need to let the explanations sink into my brain first.. :P

Huei said...

HAHAAHHA omfg what a loyal hater!

so wait..this means when it comes to the consumers...we don't pay 4% tax in actual fact...we pay 4% * 4 (manufacturer + distributor + wholesaler + retailer) = 16%?

will it become like

Manufacturer sells to distributor for rm100 + 4% = rm104

distributor sells to wholesaler for rm104 + 4% = RM108.16

wholesaler sells to retailers for RM108.16 + 4% = RM112.4864

Retailers sells to consumers for RM112.4864 + 4% = RM116.985856

?

Although the extra 0.985856 is very little...but if the goods costs millions....it's going to be a huge figure!

Anonymous said...

huei,

u damn dumb....no hope man....

what are u going to do about this tax policy huei? are u going to protest? or are u going to just pay it and get on with life...

beezee~bee said...

darn! why issit that it is always sex that's excitingly easily understood!

LOL!

yes, yes...the whole message disseminated perfectly :)

thebiglazyworm said...

An interesting way to put it. Although I've gotta say that you lost me at the sex part, really.

Pinknpurplelizard said...

Zewt... U have confused me. I was rather clear until u paraphrased the whole thing in this jargon... Sigh...

Anonymous said...

the rest of us takes it in the ass!

zewt said...

day-dreamer - haha... abit only ah? which part?

April Ng - i should retire and be a lecturer eh? later kena sue for sexual harassment!

Ninja Coffee - the contents get to you or not ah?

anon @ 14/1 12.41am - defeat the purpose already lor.

MKL - come on... aint that easy, is it?

duesXMachina - hahaha... glad to hear that.

zewt said...

anon 14/1 3.56am - ha ha ha.

eiling lim - i probably need to put things into a better perspective in alter articles.

beetrice - good to know. my intention was to grab ppl's attention on this dry topic.

anon @ 14/1 11.19am - dirty mind hahaha...

anon @ 14/1 11.48am - they probably wont understand every other things... :P

InjusticeSistem - hahahahaha... cannot man, cannot let those pity thing affect our sex lives...

zewt said...

terra shield - that's basically it. shall explain more, in a serious tone later.

anon @ 14/1 1.06om - aint friendly.

Jane Sunshine - got your mail already :)

anon @ 14/1 4.57pm = frankly, i dont see much difference. just that the way you described it, not many will understand. i need to bring it down to lay-man level. having said that, malaysia always try not to emulate singapore in legislation, though we all know it's mostly the same.

anon @ 14/1 8.57pm - dont need to pretend that you know hokkien man. how is shah alam?

j_yenn - hahahaha... focus! focus!

life for beginners - hope you get a better second shot... ooooo...

zewt said...

missironic - haha... just wanna attract attention only.

Huei - yeah, damn loyal right. super devoted. like i explained to you, your understanding is incorrect.

anon @ 15/1 5.12pm - oh man, you are so full of hope.

beezee~bee - hahaha... i hope it did...

thebiglazyworm - hi there. welcome. hahaha... to where did you lose yourself? :)

pinknpurplelizard - that will be coming right up :)

anon 18/1 9.48am - it's painful...

Huei said...

anon at 5:12pm - erm..twinkle twinkle little starrr

zewt said...

huei - how i wonder what you are lol!