Zero-rated supply
Encyclopedia
In economics
, zero-rated supply refers to items that are taxable, but the rate of tax
is nil on their input supplies. The term is applied to items that would normally be taxed under valued-added systems such as Europe
's Value Added Tax
(VAT) or Canada
's Goods and Services Tax
(GST). Examples of these items include: most exports, basic groceries, and prescription drugs.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, zero-rated supply refers to items that are taxable, but the rate of tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
is nil on their input supplies. The term is applied to items that would normally be taxed under valued-added systems such as Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
's Value Added Tax
European Union Value Added Tax
The European Union value added tax is the system of value added tax adopted by nations in the EU VAT area. The European Union itself does not collect the tax, but EU member states are each required to adopt a VAT that complies with the EU VAT system...
(VAT) or Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
's Goods and Services Tax
Goods and Services Tax (Canada)
The Goods and Services Tax is a multi-level value added tax introduced in Canada on January 1, 1991, by then Prime Minister Brian Mulroney and his finance minister Michael Wilson. The GST replaced a hidden 13.5% Manufacturers' Sales Tax ; Mulroney claimed the GST was implemented because the MST...
(GST). Examples of these items include: most exports, basic groceries, and prescription drugs.