Portugal will lift VAT from certain food products in an attempt to ease pressure on household bills after inflation in the country reached 7.8% in March.
The 6% rate of VAT has been removed on 46 categories of food, including dairy, meat and potatoes, a statement from Portugal’s government said.
Prime Minister António Costa said the zero VAT applied to the clutch of “essential foods” will last for a period of six months.
“The expectation is that, over the six months, inflation will evolve in a direction that will allow the withdrawal of the current measures. If not, we’ll have to sit down at the table again and see what we can do,” he added.
Costa said the country’s government had worked with industry representatives in Portugal to decide which products would qualify for the VAT cut.
“The state has done its part, now there is other work that has to be done so that the reduction of the VAT rate has an effective impact on the lives of families,” he added
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
“The Ministry of Health identified a healthy basket. After that, APED, the Portuguese Association of Distribution Companies, provided a list of the types of products most consumed by the Portuguese people. We identified 44 products. Through the debate in parliament, these categories were broadened.”
Last year, the government’s priority was mainly to control the increase in energy prices, and the implied measures “were very successful,” according to Costa.
“Next, we witnessed a global slowdown of inflation, except for food products, a situation that has several causes,” he said.
The list of food goods with 0% VAT includes grains and potatoes, dairy products, legumes, vegetables, fats and oils, meat and fish, and other products. The list of foods includes bread, potatoes, pasta, rice, cow’s milk, pork and chicken.
Fernando Medina, Portugal’s Minister of Finance, has said an average of €12 ($13.15) would be saved on a basket of €200.
In March, Portugal’s inflation rate, as measured by its Consumer Price Index, was 7.4%, down from 8.2% in February and 8.4% in March.