It is a consumption tax that the government imposes on the sale of goods and services, and is usually collected at the point of sale by the seller, who collects it in turn and hands it over to the government. This tax is levied on various selling agencies, whether they are stores, people or subsidiaries, according to specific laws.
The concept of sales tax:
The traditional sales tax is imposed only on the end user of the good or service. Since most commodities in modern economies go through a number of stages of industrialization undertaken by different entities, a great effort is required from documentation to prove who is the end user who must pay sales tax. For example, suppose a sheep breeder sells wool to a sewing (yarn) fabric company, then this company sells its product to another clothing manufacturer, which must also obtain a certificate of sale. Finally, the clothing manufacturer sells woolen socks to a retail store, which will charge its customers a sales tax in addition to the price of the socks.
There are various legislations for imposing a sales tax and often overlapping, with states, provinces, and municipal administrations imposing their own taxes. The sales tax is very similar to the usage tax that applies to citizens when purchasing materials from a region whose laws differ from the region in which they live. Both taxes are generally imposed at the same rate, but the usage tax is difficult to apply because it is imposed only on large quantities of material goods purchased.