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Portugal Extends Zero VAT on Essential Foodstuffs, Providing Relief to Consumers

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In a move aimed at alleviating the financial burden on its citizens, Portugal has extended its zero VAT policy on a selection of “essential” food items until the end of the year. This decision, which comes at a cost of €140 million ($149.8 million) to the government, was initially introduced in April for a six-month period and has now been prolonged following the approval of the VAT extension by the Council of Ministers.

The tax holiday encompasses 46 everyday food products, including fruits, vegetables, meat, fish, dairy, and bread. According to Minister of the Presidency Mariana Vieira da Silva, the initial phase of zero VAT resulted in nearly a 10% reduction in prices for consumers between April and August.

This extension has been deemed a “success” by Da Silva, as it effectively lowered the cost of essential, healthy foods. The move has contributed to a notable decrease in food inflation, from 8.6% to 7.3% in August, though still higher than the desired medium-term objective.

Portugal’s decision to extend the tax relief until the end of the year is a collaborative effort between the government and the food production and distribution sectors, with the aim of mitigating the impact of inflation on family income. Similar measures to combat rising food costs have been implemented in other European countries like France and Hungary, highlighting the global concern for affordable access to essential food items.