Business, Legal & Accounting Glossary
Denoting goods on which the buyer pays no VAT although the seller can claim back any tax he/she has paid.
These include some food items, newspapers, magazines and books, medicine and children’s clothing.
Almost all countries apply preferential rates to some goods and services, making them either “zero-rated” or “exempt.” For a “zero-rated good,” the government doesn’t tax its retail sale but allows credits for the value-added tax (VAT) paid on inputs. This reduces the price of a good.
Zero-rated goods are products that are not subject to value-added taxes mainly due to their societal importance or personal necessity. For VAT purposes, these goods are zero-rated and don’t have additional taxes levied on them. Some examples include groceries and goods sold by charities.
Oranges are suitable, because they are zero-rated.
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This glossary post was last updated: 9th December, 2019