Value Added Tax on Groceries Reinstated
The Value Added Tax (VAT) exemption on a selection of 46 food categories is concluding after nearly eight months of implementation. During this period, essential foods such as onions, tomatoes, apples, bananas, bread, potatoes, rice, peas, chicken, cod, eggs, canned tuna, milk, vegetable-based drinks, olive oil, and butter enjoyed a zero-VAT status.
However, as of January 4, the Portuguese Association of Distribution Companies (APED) has confirmed the immediate reinstatement of VAT on these products. The exemption period, initially intended until the end of October 2023 but extended to address operational challenges, provided a smooth transition to comply with the law and reintroduce VAT without anticipated logistical issues.
Prices Increased, Thus Nullifying Tax Exemption
A recent price comparison conducted on December 19 revealed an increase in the cost of zero-VAT foods since the introduction of the zero-VAT measure on April 18. This uptick is primarily attributed to price rises in items such as olive oil, specific vegetables, fruits, and bread.
According to the price collection carried out by Lusa on the website of a food distribution chain, the purchase of 49 foods subject to zero VAT cost 173.99 euros on December 19 (2023), compared to the 166.86 euros that would have to be spent on April 18 (2023), that is, the day this measure came into force.
Paraphrased from Diario Noticias
Consumers are now urged to vigilantly monitor prices, make comparisons, and manage their finances prudently to avoid unexpected expenses. The focus on fiscal responsibility becomes crucial as the reinstatement of VAT may impact the overall cost of these essential food items.
Conclusion
The discontinuation of the VAT exemption could signal a significant change in the pricing landscape for essential food items. As consumers adapt to the reintroduction of VAT, it is crucial to engage in careful price monitoring, comparisons, and effective financial management.
The key question revolves around whether the initial zero-VAT policy might have provided an opportunity for retail providers or producers to raise the prices of these essential products, thus increasing their margins. The upcoming period will reveal whether prices will undergo readjustments or whether a substantial price increase equivalent to the added VAT will be avoided.
From Diario Noticias
Care for a share?
Comments