Government Proposes VAT Exemption for Sugar, Cooking Oil, and Soap

- Implementation depends on parliamentary approval

- The previous government removed exemptions, claiming no consumer benefit

By Noemia Mendes

Maputo (MOZTIMES)—This Tuesday, the Council of Ministers approved a proposal to exempt sugar, cooking oil, and soap from Value-Added Tax (VAT). However, the measure will only come into effect once the Mozambican Parliament, the Assembly of the Republic, approves the revision of the VAT Code.

According to the government spokesperson, the Minister of State Administratiion, Inocêncio Impissa, the VAT exemption aims to reduce living costs and is planned to remain in force until 31 December this year. The exemption also covers raw materials, intermediate goods, spare parts, equipment, and components used by the domestic sugar industry, as well as products resulting from cooking oil and soap production.

"This will alleviate production costs and enable business owners, factories, and other production units to introduce or reintroduce these products more easily for the benefit of the population," Impissa stated at a press conference.

This is not the first time the government has exempted these products from VAT. A similar measure had previously been in place for over a decade, but in December 2023, the Tax Authority reinstated VAT, arguing that the exemption had no tangible impact on consumer prices.

Now, facing public pressure due to the rising cost of living, the government is restoring the VAT exemption, hoping to stabilise the prices of sugar, cooking oil, and soap at least.

In Mozambique, other essential goods such as rice, maize, maize flour, mackerel, iodised salt, potatoes, onions, bread, and milk are already VAT-exempt. (NM)

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