Mozambique: Soap and oil are more expensive (and so is sugar) – Here’s why | A Verdade

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Mozambique: Soap and oil are more expensive (and so is sugar) – Here’s why | A Verdade

2:05 CAT | 11 May 2020

Photo: A Verdade

After the brown sugar shortage and resulting price hike, Mozambican cooking oil and soap producers have now revealed that prices of these products have gone up 17% higher January 2020 because the government had removed the VAT exemption that the sector benefited from.

The representative of one of the largest agro-industrial companies in Mozambique announced on Thursday ( May 7) that “the price of cooking oil and soap has risen 17% since January 2020” after the government failed to renew the VAT exemption on these important components of the Mozambican food basket.

“Before the pandemic, our big question was how to ensure that we have a market with free and fair competition. If VAT is going to be charged at the same time that we have a lot of cooking oil coming in from South Africa at a very low price, our main concern was that we were going to have to sell our national product for more than imports. We were unable to do this, so sales dropped considerably, and this worsened with the pandemic,” Cláudia Manjate explained.

The representative of Olam Mozambique asked for “an exemption, at least for the duration of the pandemic. After that, we can return to the discussion of how we are going to apply VAT and then how we deal with illegal oil imports. At this moment, the focus is on the exemption from VAT to make cooking oil and soap more accessible”.

Strangely, the government indicated as one of the measures to mitigate the impact of Covid-19 in its State Budget proposal for this year, recently approved by the Assembly of the Republic, the “suspension of VAT payment for oil and hygienic products not covered in the provisions in force, through the extension of Law no. 13/2016 from 30 December to December 2020”.

The decision has yet to be formalised in the Boletim da República [government gazette].