Government announces that basket of essential goods will have a VAT rate of 0%

Government is also trying to conclude an agreement with sectors of food production and food distribution,

The Government will reduce VAT on essential food goods, finance minister Fernando Medina announced today, setting the rate at zero in the basket of essential goods.

Fernando Medina added that, in order to implement this VAT measure, the Government is trying to conclude an agreement with the food production sector and with the food distribution sector, aiming to create stability and confidence, “ending the shock of not knowing if one day it will arrive to a shelf with a higher price than he found the day before”.

However, Medina admitted that the Government has not yet defined the type of products that will integrate the basket of essential goods with zero VAT rate, which will be based on the basket of healthy food, but also products of high consumption.

The zero VAT rate "will be applied in a basket that will be the subject of an agreement", said Finance Minister Fernando Medina, noting that it will be based on the healthy food basket prepared by the Ministry of Health, but that it will also cover "the most consumed” by Portuguese families.

The measure was announced today at a joint press conference by the ministers of the Presidency, Mariana Vieira da Silva, Finance, Fernando Medina, and Social Security, Ana Mendes Godinho, which is taking place in Lisbon, to present the new aid package to mitigate the rising cost of living.

On Thursday, in a debate in parliament, the Prime Minister announced that his Government would work with agents in the food chain to ensure a reduction in the price of food goods, admitting lowering VAT.

Today, the Minister of Finance said that the implementation of this measure depends on the realization of a tripartite agreement between production, food distribution and the Government.

“The VAT measure is carried out within the framework of an agreement”, he said, specifying: “Only within the framework of that agreement, in which we are working in a very good spirit”, will it be applied.

Medina also said that he hopes to be able to reach an agreement at the beginning of next week, so that the measure can “quickly” begin to be applied, stressing that the objective is to be able to “resonate in prices the decrease in VAT” and the stabilization of price evolution .

Although zero VAT applies only to a basket of products, the Minister of Finance expressed confidence that the measure will influence the prices of other products.

At the press conference, the Government also announced a new monthly support of 30 euros for the poorest familiesAs well as an additional 1% increase for the civil service.