Zero rated VAT

Zero-rated VAT is a value-added-tax treatment under which a supply is taxable but charged at a rate of 0 percent, so the supplier accounts for no output tax yet can still recover input VAT on related costs. Exports of goods outside the VAT territory are the principal zero-rated supply in trade: the seller charges no VAT and reclaims the input tax, while import VAT is then levied in the destination country. Zero-rating differs from an exempt supply, where no VAT is charged but input tax is not recoverable. Exporters must hold evidence of export, such as customs declarations and transport documents, to support the zero rate.