The government extended zero VAT on the basic food basket until the end of the year

The Council of Ministers approved this Thursday the extension of the temporary exemption from VAT on the food basket until the end of the year.

The Minister of the Presidential Administration Mariana Vieira da Silva delivered the information at a briefing after the meeting of the Council of Ministers, specifying that the extension of the measure “costs 140 million euros.”

“The Council of Ministers approved this Thursday a bill, which it will now submit to the AR, which extends the transitional exemption from VAT on certain food products until December 31, 2023,” he said.

The extension of the measure that exempts a set of 46 food items from VAT, which came into effect in April and is expected to end in October, was already announced this Wednesday by Prime Minister António Costa.

Mariana Vieira da Silva justified the decision with the government’s assessment of the “very successful” impact of the measure, arguing that, according to the National Institute of Statistics, food inflation slowed last month from 8.6% to 7.3% and since the entry into force rates of 15.4% to the current value.

The official noted that the measure “is being extended exactly under the conditions on which it was approved”, specifying that “it was accompanied by a set of measures to support the manufacturing sector, which are ongoing to this extent” and that 46 products in the 0% VAT basket will be left without changes.

Answering a question about the next year, the minister mentioned the state budget for 2024 (OE2024).

“The framework that these issues of fighting inflation will have from January 1, 2024, will be the work in the State Budget, presented in the Assembly of the Republic on October 10 next year, provided that what we predicted for a decrease in inflation was confirmed,” he said. He. said.

However, he said that “decisions remain to be made depending on the decisions of the European Central Bank (ECB) and inflation indicators “toward” the end of the year.”

Products temporarily exempt from VAT were selected based on the health food basket of the Ministry of Health and data from distribution companies on the products most consumed by the Portuguese.