VAT re-imposed on sugar, soap and cooking oil

Maputo, 17 Jan (AIM) – The Mozambican Tax Authority (AT) has confirmed that Value Added Tax (VAT) is being charged on soap, sugar and cooking oil, after 17 years in which these goods were zero-rated.

Any shopper would have noted price increases for these three products as from the start of the year. This was inevitable after, in December, the Mozambican parliament, the Assembly of the Republic, paid no attention to calls from opposition parties to renew the exemptions from VAT.

To ensure that there could be no misunderstanding, the AT issued a circular confirming that the period of exemption is now over, and that VAT is henceforth being charged on soap, sugar and cooking oil at the standard rate of 16 per cent.

The exemption, the AT said, had always been intended as temporary. The government had introduced it in 2007 to ease the cost of living and to protect the Mozambican industries producing these goods from foreign competition.

The exemption was renewed in 2020, ensuring that sugar, soap and cooking oil would remain zero-rated until 31 December 2023. But now these goods will pay the full 16 per cent VAT.

Prices in the shops and markets have already risen, with the traders blaming the price rises on the re-imposition of VAT. Since sugar, soap and cooking oil are regarded as essential goods, purchased by almost every Mozambican household, the end of VAT exemption will certainly have an impact on the inflation rate.

(AIM)

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