On Wednesday (14), Parliament unanimously approved a bill exempting sugar, edible oils and soap, as well as raw materials and machinery used in the production of these goods, from Value Added Tax (VAT) until 31 December 2025.
The measure, which amends the VAT Code, aims to ease the cost of living for citizens and encourage domestic industry by reducing the tax burden on essential goods and the production process.
The government estimates that the temporary exemption will result in a loss of tax revenue of around 2.2 million meticals (33.8 million dollars), but considers that the economic and social benefits outweigh the negative budgetary impact.
All parties represented in the Assembly of the Republic voted in favour of the proposal. The Mozambique Democratic Movement (MDM) justified its vote with the need to alleviate the cost of living, while calling for strict monitoring of the measure’s implementation and advocating the extension of exemptions to sectors such as energy, water and education. The party also reiterated its proposal to reduce the general VAT rate from 16% to 14%.
The Mozambique Liberation Front (Frelimo) welcomed the Executive’s initiative, highlighting the party’s commitment to the welfare of the population, but suggested that future revisions include a wider range of essential products.
The Mozambican National Resistance (Renamo) also expressed support for the proposal, stressing the need to move forward with fuel exemptions in the future in order to ensure a greater impact on reducing the cost of living.
The Podemos party highlighted the spirit of political dialogue that allowed the measure to be approved, expressing the expectation that the Government will extend the exemption period beyond December 2025.
When presenting the proposal, the Minister of Economy and Finance, Carla Louveira, said that the measure aims to ‘contribute to improving the well-being of the population by reducing the cost of the basic basket’ and strengthen the competitiveness of national industry by reducing production costs.
Source: Lusa
