Mozambique: No more VAT exemptions for oil and soaps

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Mozambique: No more VAT exemptions for oil and soaps

11:51 CAT | 22 Jul 2024

File photo: Notícias

The government has reiterated that it will no longer be exempting cooking oil, sugar and soap from Value Added Tax (VAT), saying that the intended purposes of the exemption were not being achieved.

This position was reiterated last week by the Minister of Industry and Commerce, Silvino Moreno, during a meeting with businesspeople considering barriers to investment in Mozambique.

The end of the VAT exemption on the mentioned products occurred on December 31st of last year. Its introduction had had as its main objective, influencing the industry to invest in national raw materials.

But, the government explained, during the period of exemption the opposite had in fact occurred, with refineries continuing to import more than one million tons of crude soybean, sunflower and palm oil, worth around 88.7 billion meticais, with the argument that domestic production is insufficient.

The government had therefore decided to move forward with another strategy for the improvement and growth of the industry, setting aside the VAT exemption. (VAT constitutes the state’s main source of revenue collection.)

“The government will not return to VAT exemption, as in the previous format, but will instead focus on incentives,” the minister said.

He explained that the aim was to foster companies which extract and refine oil from domestic raw materials, placing product on the market at a price within the reach of consumers.

Source: Notícias