The Assembly of the Republic unanimously approved on Wednesday (14) the bill exempting sugar, cooking oils and soaps from Value Added Tax (VAT), including the raw materials and machinery used in their production. The measure will remain in force until 31 December 2025 and aims to mitigate the impact of the cost of living on Mozambican families, while also seeking to stimulate national industry.

According to government calculations, the amendment to the VAT Code represents an estimated loss of tax revenue of around 2.2 billion meticais, equivalent to about 33.8 million dollars. However, the Executive argues that the social and economic benefits associated with the decision outweigh the direct budgetary impact.

The proposal was received with unanimous support from all parliamentary benches. The Democratic Movement of Mozambique (MDM) justified its vote in favour as a necessary response to the pressure on the cost of living, but stressed the importance of tight oversight to ensure that the measure actually reaches citizens. The party also suggested extending the tax exemption to sectors such as energy, water and education, reiterating its proposal to cut the general VAT rate from 16% to 14%.

The Frelimo bench praised the Executive's proposal, stressing that it reflects the party's commitment to social well-being, and called for more essential products to be included in future revisions of the law.

Renamo likewise expressed its support, arguing that, as a next step, the exemptions should cover fuel, in order to have an even more significant impact on easing the population's everyday expenses.

For its part, the Podemos party welcomed the spirit of political dialogue that allowed the measure to be approved by consensus, and voiced the expectation that the Government will consider extending the exemption beyond the established deadline.

During the presentation of the proposal, the Minister of Economy and Finance, Carla Louveira, stressed that the central aim is to “contribute to improving the population's well-being by reducing the cost of the basic food basket” and, at the same time, “to strengthen the competitiveness of national industry by lowering production costs”.