Exempt supplies

Exempt supplies refer to certain goods and services that are not subject to sales tax or value-added tax (VAT). This means businesses do not charge tax on these items and cannot claim tax back on their related expenses. Common examples include basic food items, healthcare services, and educational courses. The purpose of exempting these supplies is often to make essential services and goods more affordable for consumers. While exempt supplies benefit consumers, they can affect a business's cash flow because they can’t recover tax on their costs associated with providing those supplies.