Mogadishu(Mogadishu24)-The Federal Government of Somalia has officially repealed the 5% sales tax on healthcare services and pharmaceuticals in Mogadishu, following significant public concern over the economic burden on patients. 

The reversal of this fiscal policy is expected to alleviate cost pressures on the healthcare sector and improve access to essential medical services.

After two weeks of implementation, the government has rescinded the law due to its adverse economic impact on both consumers and healthcare providers.

In a statement made during the 103rd anniversary celebration of De Martino Hospital, Deputy Minister of Finance Abdiqafar Elmi Hange emphasized that a policy review revealed the majority of East African and sub-Saharan countries do not impose sales taxes on healthcare services. 

This comparative analysis prompted the Somali government to reassess and withdraw the tax to maintain competitiveness and affordability in the sector.

Hange further noted that the exemption mechanism will be facilitated through payment platforms operated by telecommunications companies. However, the differentiation between healthcare providers and other entities using these platforms presents a technical hurdle that could delay full implementation.

This policy shift is expected to have a positive macroeconomic effect by reducing healthcare costs, supporting household spending capacity, and promoting public health outcomes without the disincentive of additional taxation on critical services.