Mozambique: CTA insists on VAT exemption for cooking oil, soap and sugar

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Mozambique: CTA insists on VAT exemption for cooking oil, soap and sugar

1:59 CAT | 27 Nov 2024

File photo: Notícias

The private sector is once again insisting that the government exempt cooking oils, soap and sugar, as well as chicken and eggs, from value added tax (VAT).

This, according to the Confederation of Economic Associations of Mozambique (CTA), would stimulate industry in the context of constant crises such as the current scenario of strikes and vandalism under the pretext of repudiating the recent electoral results.

CTA president Agostinho Vuma recently told at a meeting called to assess the impact of the demonstrations that some relief in the tax burden would be an oxygen balloon for companies battling to survive market adversities.

Entrepreneurs also consider it necessary to expand VAT credit compensation, which is currently excluded from the tax credit system.

VAT exemption on sugar, edible oils and soaps ended on December 31 last year.

Minister of Industry and Commerce, Silvino Moreno, has already voiced his opposition to exemption on the basis of its adverse effect on revenue, and because the intended purposes of the measure were not achieved.

In fact, Moreno said that the approach was to look for alternatives that can boost industry, especially since exemption is supposed to encourage investment in national raw materials.

The minister explained that the intention was for domestic companies to extract and refine oil from locally sourced raw materials and place the resultant product on the market at a price within reach of the final consumer.

Meanwhile, the minister said, what had actually happened was the opposite. Between 2015 and 2023, refineries imported more than one million tons of crude soybean, sunflower and palm oil, at an estimated cost of 88.7 billion meticais, on the basis that domestic production was insufficient.

It is in this context that the government had decided to move to another strategy for the improvement and growth of the industry, leaving VAT, which constitutes the state’s main source of revenue, alone.

Source: Notícias