Mozambique: Cabinet extends VAT exemption on sugar, soap and oil

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Mozambique: Cabinet extends VAT exemption on sugar, soap and oil

3:16 CAT | 28 Oct 2020

[File photo: Diário Económico]

The Council of Ministers’ 39th Ordinary Session in Maputo on Tuesday decided to extend the exemption from value added tax (VAT) on cooking oil, soap and sugar.

Council of Ministers spokesman Filimão Swazi did not specify the length of the extension, but said that the measure aimed to encourage the domestic production of sugar, edible oil and soap, as well as purging VAT throughout the entire marketing chain, with a significant impact on the consumer price.

The decision will now be submitted to the Mozambican parliament, the Assembly of the Republic.

The government had exempted cooking oil, sugar and soap from VAT for 18 years continuously, but in December last year decided to stop doing so. However, in view of the impact of Covid-19 on the purchasing power of families, the government backtracked and, in mid-2020, revoked the VAT until 31 December.

The extension of the exemption period was, until last Tuesday, a principle demand of the business class, which repeatedly called on the government for an extension with a view to protecting national industry and consumers, at a time when both the smuggling of those products from other countries and the impact of the pandemic were worsening.

The extent of the exemption is yet to be disclosed.

By Evaristo Chlilingue

Source: Carta de Moçambique