Mozambique: End of VAT exemption affects sugar sector

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Mozambique: End of VAT exemption affects sugar sector

2:35 CAT | 03 Dec 2024

File photo: Notícias

The end of Value Added Tax (VAT) exemption is negatively affecting the sugar sector and putting pressure on prices and sales.

The executive director of the Association of Sugar Producers of Mozambique (APAMO), Orlando da Conceição, believes that the sector needs to remain exempt from VAT in order to remain sustainable.

The statement corroborates the position of the Confederation of Economic Associations of Mozambique (CTA), which argues that the reinstatement of the exemption could mitigate the impact of post-election demonstrations on companies.

“We tried for a year to work to get the VAT exemption maintained, because the industry still needs incentives. We tried with the Ministry of Economy and Finance, the parliament, but we were unsuccessful. We accepted because it is the government’s position, but it will affect our financial and cash management,” da Conceição points out.

Orlando da Conceição explained that the end of the VAT exemption has become an additional direct expense. “VAT refunds take as long as they take, so we already have a lot of money to receive, and then we will be overburdened because we have to pay VAT on our transactions,” he explained.

From another perspective, he added, VAT exemption constituted a cushion for the sector’s costs, because there are other commitments that must be met, such as the payment for sugar fortification.

“So, at the end of the day, this increases the price of sugar and, naturally, affects sales, because people no longer buy as much as they used to. Our sales have been falling since January, when VAT was introduced, because the price has risen,” he pointed out.

The VAT exemption on sugar, edible oils and soaps ended on 31 December last year, and the government has reiterated its determination not to restore the measure.

The 2024-25 campaign has produced, to date, 216,000 tons of sugar, which exceeds the 2023-24 harvest, when 210,000 tons were produced.

Source: Notícias