Reducing VAT to 6% on all food will cost 110 ME to public coffers – CIP


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The Business Confederation of Portugal (CIP) asks the Government to reduce VAT to 6% for all foods, a measure with an impact of 110 million euros, according to an analysis to which Lusa had access.

According to an assessment by Nielsen Portugal of VAT revenue between 2019 and 2022, later extrapolated by Deloitte for the entire market, food taxed at 23% yields, on average, 150 million euros per year to the State.

According to the opinion of Deloitte for Ancipa – National Association of Traders and Industrialists of Food Products, if the taxation of all foods decreases to 6%, as CIP proposes, the revenue collected for public coffers with these products would be around 40 million euros, that is, “110 million less per year compared to the current regime”.

In the opinion, Deloitte notes that “the calculated difference in output VAT may be lower than that presented”.

“We will make it clear to the Government that the real financial impact of not applying the maximum VAT rate to food will be relatively small – and substantially offset by gains in other areas,” says Manuel Tarré, a member of the CIP board, in which he represents food sector associations such as Ancipa and ALIF – Association of the Cold Industry and Trade in Food Products, which he chairs, quoted in a statement.

CIP wants an amendment to the VAT Code, with a reduction in the rate for pre-cooked food products, frozen or not, currently taxed at 23%.

In an interview with Antena 1 and Jornal de Negócios this weekend, the president of CIP revealed that this measure will be integrated into the “social pact” that CIP is developing and will present in September.

The Social Pact that CIP is preparing with the unions will underline that the change in the VAT rate will allow “bringing Portugal closer to most of the other Member States of the European Union” which tax food products intended to meet basic needs at reduced tax rates, the bosses point out.

CIP considers it an “incongruity” that “foods from the same meal pay 13% VAT if they are served in a snack bar or restaurant; or that they pay 23% VAT if they are sold frozen or fresh, already cooked or pre-cooked, in the supermarket or in a grocery store “.

“The 23% rate penalizes elderly people with mobility problems, for whom it is difficult to prepare a meal, and who are unable to afford to go to restaurants or pay for take-away,” argues Manuel Tarré.

According to the CIP official, “it penalizes young people and students who have left their parents’ home. And it also penalizes all teleworking professionals, for whom pre-prepared meals are an element of autonomy and flexibility, guaranteeing them a healthy diet”.

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