Exemptions and Exclusions

Chapter 9 draws up a taxonomy of standard and non-standard exclusions, exemptions, and zero rates, highlights the distortions caused by them and the administrative complexities to which they give rise. Broadly, it compares the treatment of various exemptions in the EU, which have also been adopted by most African countries, with their treatment under New Zealand’s GST and South Africa’s VAT. For political or administrative reasons, all VATs exempt or exclude specified goods, services, activities, entities, or sectors, but most African VATs go much further down this road than accords with VAT’s functionality and logic. Exemptions and exclusions are truly the Achilles heel of the VAT.