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Robert Dalla Costa, VAT Leader, KPMG Lower Gulf

Governments sometimes say they’ll exempt basic foods, but that’s not good. What they really mean is they’re going to zero-rate them. In other words, they’ll tax them but at zero per cent. Why? Because if they’re really going to exempt food, that will mean that food suppliers will not be able to reclaim their VAT […]

| | Dec 28, 2016 | 11:50 am
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Governments sometimes say they’ll exempt basic foods, but that’s not good. What they really mean is they’re going to zero-rate them. In other words, they’ll tax them but at zero per cent. Why? Because if they’re really going to exempt food, that will mean that food suppliers will not be able to reclaim their VAT charges. So what’s going to happen? They’re going to increase food prices, which is not what governments want. And that is why it’s important to understand the difference between something that’s zero-rated and something that’s exempt.


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