Zero- Rated Goods

Posted in Finance, Accounting and Economics Terms, Total Reads: 680
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Definition: Zero- Rated Goods

In some countries, Value- Added Tax (VAT) is not levied on some products, especially items such as food, beverage, children’s clothing, water, books and other publications and equipment for the disabled.


Advantage:

Save consumers money because of the tax exemption


It is not actually a tax exemption. The difference is that, in a zero- rated good, VAT is present, it is just 0%. Whereas in a Exempt Tax, the tax is exempted altogether and there is no VAT at all.

The manufacturer can reclaim the VAT in case of Zero- Rated Goods.

 

Customers save a lot of money due to zero rated goods. A few examples can be basic groceries and medical supplies in a few countries.

 

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