- VAT exemption and zero-rated VAT are two provisions that provide relief to specific sectors or products.
- VAT exemption allows certain goods and services to be exempt from VAT altogether, while zero-rated supplies are subject to VAT at a 0% rate.
- Businesses can reclaim the VAT paid on purchases for zero-rated supplies, but not for exempt supplies.
- The specific items or services exempt from VAT can vary from one country to another. Businesses must accurately classify their goods and services to ensure they are applying the correct VAT treatment.
- Zero-rated VAT can be a valuable benefit for businesses, while VAT-exempt supplies do not enable VAT reclaims.
- Businesses may find various VAT systems challenging to navigate and may require expert advice to ensure accurate VAT treatment and compliance with specific VAT rules.
Source Taxually
