difference between Zero rate supplies and Exempt supplies in UAE VAT The above question becomes obvious, because, the end result of zero-rated supplies and exempt supplies are same, i.e. VAT is not charged on the supply. Though the VAT rate is at zero per cent they have differential treatment in claiming input tax credit (ITC). On the purchase of goods or services which are supplied as zero-rated supplies, you are allowed to avail the VAT paid as ITC and set-off against your output liabilities. In the case of exempt supplies, you will not be allowed to claim ITC on VAT amount paid on your purchases. Also, you may expect the details of zero-rated supplies and exempt supplies to be reported separately in VAT Return. The VAT Return format is yet to be made available