Zero-Rated Goods - Definition

Goods and services that are not subject to a VAT. Examples of potentially zero-rated goods and services include financial services and items donated to a charity that the charity later sells.

VAT is tax levied at each stage in the production of a good or service that results in value being added to the product. For example, a timber company pays a percentage on the timber it sells to a miller. The miller then pays the same percentage (less what the timber company paid) on the timber it has refined into planks of wood, which it then sells to a carpenter. The carpenter likewise pays the same percentage (less what the Timber Company and miller paid) on the planks of wood he/she makes into a table, which he/she then sells to a customer. Proponents of a VAT state that each person or company along the supply chain has an incentive to ensure that every other person or company pays the VAT, reducing the likelihood of tax evasion. They also argue that it is more straightforward than other taxes because there are no exemptions or loopholes. Opponents of a VAT counter that the tax is regressive and unduly harms poor people, who, as a rule, spend more of their discretionary income on necessary items.



Terms near "Zero-Rated Goods "

Zero-Sum Game
Zero-Volatility Spread (Z-Spread)
Zeta Model
Zig Zag Indicator
ZMK
Zombie Bank
Zombie Debt
Zone Of Possible Agreement
Zone Of Support
Zoning Ordinance
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