Investopedia explains 'Zero-Rated Goods '
Zero-rated goods can save consumers a significant amount of money. In the United Kingdom, for example, the standard VAT rate levied on most goods is 17.5% and the reduced rate is 5%. However, because the VAT is a hidden tax, which means it is already included in the price of goods, the consumer may be unaware that a good is zero rated. A fourth category of goods - exempt goods - also carries no VAT.
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