Or it can occur when one business buys a good or service from another business. The gross receipts tax is similar in concept to a sales tax in that it is levied as a percentage of the dollar value of the transaction. However, there are two major differences between a gross receipts tax and a sales tax. One is that a sales tax is only levied at the point of final sale of a product, while the gross receipts tax is levied at all levels of sale. That is, a sales tax is levied when a consumer or business buys a product for final use.
Businesses pay the sales tax on furniture, office supplies, and similar items.
They do not pay the sales tax when they buy goods that are used in the manufacturing process. The gross receipts tax is levied on the total revenues or receipts of all firms, not just at the point of final sale of the product. The second difference is that the sales tax is added on to the price of the product at the time of sale and is highly visible to the consumer. The gross receipts tax is levied on the seller's total revenue stream. The gross receipts tax is therefore more of a hidden tax that is not immediately apparent to the buyer of the product.