How does VAT generally impact exports?

Exports are generally zero-rated for VAT purposes. This means that while goods and services sold domestically are typically subject to VAT at the standard rate, exports do not carry VAT in the same way. Instead, they are zero-rated, which allows businesses to not charge VAT on their exported goods and services.

The significance of zero-rating for exports lies in the ability for exporters to reclaim input VAT that they may have incurred on their purchases or expenses related to those exports. This can alleviate some of the financial burdens on businesses that trade internationally, making them more competitive in the global market. By reclaiming input VAT, exporters can effectively mitigate the impact of VAT on their operations.

The other options suggest scenarios regarding VAT on exports that do not align with the typical treatment under VAT regulations, where exports are usually not subject to the standard taxation approach.