Finance Law in Cape Verde
Cape Verde's financial legal framework is designed to promote economic development, ensure financial stability, and attract both domestic and foreign investment. Key components of this framework include:
1. Investment Laws:
Investment Law: This law establishes the general bases to accelerate and facilitate investments in Cape Verde, outlining the rights, guarantees, and incentives for investors. It applies to all economic investments made within Cape Verde or abroad by national or foreign investors seeking to benefit from the provided incentives.
External Investment Code: Article 9 of this code grants foreign investors the right to transfer abroad, in a freely convertible currency, all amounts resulting from foreign investment operations duly registered, including profits, dividends, and capital gains.
2. Financial Institutions and Regulations:
Banking Sector Regulations: Under Cape Verdean financial laws, only banks and financial institutions duly licensed by the Bank of Cape Verde are authorized to carry out banking and financial activities.
Financial Management Companies (SGF): These are parabanking institutions regulated under Law No. 3/V/96, providing services such as factoring and financial leasing.
3. Payment Systems and Electronic Money:
- Payment System Framework: Legislative Decrees No. 7/2018, No. 8/2018, and No. 9/2018 establish the legal framework for the regulation, management, and operation of Cape Verde's payment system, including the provision of electronic money services and the activities of payment institutions.
4. Virtual Assets and Digital Banking:
- Law No. 30/X/2023: Enacted on June 22, 2023, this law regulates the provision of services with virtual assets and the establishment of digital banks in Cape Verde, aiming to modernize the financial sector and attract fintech investments.
5. Taxation and Incentives:
- Tax Credits and Incentives: Cape Verdean tax law allows a foreign tax credit to mitigate double taxation on foreign income taxed in another jurisdiction. The tax credit is equal to the lesser of (i) the income tax paid abroad or (ii) the corporate income tax fraction calculated before the deduction, corresponding to incomes that may be taxed in the foreign country.
6. Foreign Exchange Controls:
- Capital Transfers: Foreign investors have the right to transfer abroad, in a freely convertible currency, all amounts resulting from foreign investment operations duly registered, including profits, dividends, and capital gains, at the exchange rate prevailing in Cape Verde on the date the request is made.
These laws and regulations collectively create a structured and transparent financial environment in Cape Verde, aiming to foster economic growth, attract investment, and ensure the stability of the financial system.
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