Mozambique: VAT exemption on sugar, cooking oil and soaps ends next December

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Mozambique: VAT exemption on sugar, cooking oil and soaps ends next December

8:17 CAT | 05 Jan 2023

FILE - For illustration purposes only. [File photo: Lusa]

The Value Added Tax (VAT) exemption on sugar, cooking oil and soap ends on the 31st of December of this year. The measure was approved by parliament in November, 2020, and is contained in Law No. 22/2022, of December 28, which approves the new VAT Code.

According to the document, the exemption from VAT payment not only covers the sale of sugar, but also the purchase by the national sugar industry of raw materials, intermediate products, parts, equipment and components.

Transfers of goods and provision of services carried out within the scope of agricultural sugarcane production and intended for that industry are also exempt from VAT payment.

The cooking oil and soap manufacturing industries are also exempt from paying VAT on the purchase of goods to be used as raw material in the manufacture of these products, which are considered essential.

It should be noted that the VAT exemption on sugar, cooking oil and soaps was established in May, 2020, as one of the measures to mitigate the effects of the Covid-19 pandemic, and was renewed in December of the same year with the expiry scheduled for December 31st, 2023.

A study by the Centre for Public Integrity (CIP) however revealed that the measure has had no effect, with consumers continuing to pay high prices for these products.

In another area, raw materials for the manufacture of solar panels are exempt from VAT until December 31, 2025, in an effort to boost the government’s rural electrification project.

Source: Carta de Moçambique