This change is part of the law that approves the revision of the General State Budget (OGE) for 2020, which imposes a five percent VAT rate on these products.
It is recalled that this law was published in the Diário de República on 11 August.
According to Expansão, food distributors say they were taken by surprise by this change, even admitting to be in default because they did not raise prices.
The basic basket consists of products such as beans, rice, wheat flour, corn flour, non-concentrated milk, powdered milk, edible oil, cane sugar and soap. These goods, considered essential, were exempt from paying VAT under Law No. 7/19 of 24 April, known as the Value Added Tax Code Law.
However, with the revised OGE coming into force - due to the economic effects of the covid-19 pandemic - the publication of the 11 August law invalidates this exemption and determines a five percent VAT rate for the sale of these nine products.
Thus, and in practical terms, the price of these products is expected to increase accordingly. However, this rise comes at a time when the country is still running on 'half-gas' and resents the negative economic effects caused by the pandemic.
In the betting field there is a reduction - from 14 to 5 percent - in the VAT rate payable for the import of several dozen agricultural products such as wheat and rye seeds, barley, oats or corn, but also agricultural machines, such as tractors .
