VAT will start being levied this Friday on a basket of 46 food categories, some eight months after an exemption was introduced to combat the impact of inflation on household budgets.
Zero VAT (Value Added Tax), the result of an agreement between the government, distributors and farmers, applies to a number of food products such as onions, tomatoes, apples, bananas, bread, potatoes, rice, peas, chicken, cod, chicken eggs, canned tuna, cow’s milk, plant-based drinks, olive oil and butter.
The Portuguese Association of Distribution Companies (APED) explained to Lusa that the VAT replacement will happen “immediately”, ensuring there are no logistical restrictions.
“The measure ends at the end of working hours, and VAT will be reset to zero from January 5. This period has allowed us all to be able to calmly and transparently comply with the law again and reinstate VAT on these products,” APED Director General Gonzalo Lobo Xavier said in a statement to Lusa, clarifying that the tax will be reinstated “immediately.”
According to price collection carried out by Lusa on the website of the food distribution network, the purchase of 49 food items subject to zero VAT cost €173.99 on December 19, compared to €166.86 that would have been spent on April 18, which is the day this measure comes into force.
The explanation for this difference is the increase in prices for 14 food products, with the largest increase (in the specified time period) for olive oil, where a 0.75 ml bottle in the extra virgin category increased by 4.42 euros to 6.39 euros and in various vegetables and fruits.
Bread (in this case the Rio Mayor variety chosen) also rose from €1.11 in April to €1.19 in December – a price that is one cent higher than the price quoted by the same large supermarket on April 18, with which would be charged if it were zero. VAT was not applied.
Decou warned that consumers should pay attention to product prices, make comparisons and “keep a good handle on bills” to “avoid overspending,” stressing the importance of oversight.
“There are a number of products and services that consumers should expect to see an increase in, and the truth is that income, even if it increases, will only happen towards the end of the month. That’s why it’s important to plan well and compare prices,” Natalia Nunez, Deco’s financial protection services coordinator, said in a statement to Luse.
The products in the 0% VAT basket were selected taking into account the Healthy Food Basket of the Ministry of Health and data from distribution companies on the products most consumed by the Portuguese.
The measure was initially expected to remain in place until the end of October, but the government decided to extend it until January 4 to respond to “operational difficulties” cited by retailers.