Mozambique’s government has approved draft legislation extending a value-added tax (VAT) exemption on sugar, cooking oil and soap until the end of 2025, according to statements from President Daniel Chapo and government officials reported by Club of Mozambique on 26 February.

The proposal, approved during a meeting of the Council of Ministers in Pemba, Cabo Delgado province, would extend the VAT exemption on the transfer of sugar, edible oils and soaps, as well as certain raw materials, intermediate products, equipment and components used by the domestic sugar and soap industries.

Government Links Measure to Cost-of-Living Relief

According to a statement published on President Chapo’s official X account following the cabinet meeting, the measure forms part of a broader effort to reduce living costs and support economic activity.

Government spokesman Inocêncio Impissa said the proposal would extend existing VAT relief until 31 December 2025 and help reduce production costs for manufacturers operating in the affected sectors.

According to Impissa, authorities expect the measure to help maintain price stability for essential consumer goods and discourage speculation in products covered by the exemption.

Exemption Covers Production Inputs

The proposed legislation would apply not only to finished products such as sugar, cooking oil and soap, but also to selected raw materials, intermediate products, parts, equipment and components used in their production.

Government officials said the objective is to support domestic manufacturing by reducing tax costs throughout the production chain rather than only at the final point of sale.

According to Impissa, the measure effectively restores a tax benefit that had previously been suspended for these products.

Business Community Welcomes Proposal

Club of Mozambique reported that Mozambique’s Confederation of Economic Associations (CTA) welcomed the government’s intention to adopt measures aimed at reducing living costs.

Speaking at a press conference on 18 February, CTA vice-president for Industry Evaristo Madime described the proposal as “wise and timely,” arguing that it could contribute to social stability amid rising prices.

Madime said the business association had estimated that the cost of a basic food basket increased by around 11% following disruptions linked to post-election demonstrations, with further increases expected by the end of the year.

The VAT exemption proposal comes as the government seeks to address concerns over the cost of living, employment opportunities and the economic effects of political unrest following Mozambique’s October elections.

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Mozambique Approves VAT Exemption Extension for Sugar, Cooking Oil and Soap