Tax laws Cape Verde
Cape Verde has a structured tax system that includes a variety of taxes to fund public services and infrastructure. The tax laws in Cape Verde are governed by the General Tax Code, which includes provisions for corporate, personal, and indirect taxes. Below is an overview of the key tax laws in Cape Verde:
1. Income Tax
Cape Verde levies taxes on both individuals and businesses in the form of personal income tax and corporate income tax.
Personal Income Tax (Imposto sobre o Rendimento das Pessoas Singulares - IRS)
- Tax Rate: Cape Verde applies a progressive tax rate on personal income, with rates ranging from 0% to 25% depending on income levels.
- Up to CVE 150,000: 0% tax rate.
- CVE 150,001 to CVE 300,000: 10% tax rate.
- CVE 300,001 to CVE 500,000: 15% tax rate.
- CVE 500,001 to CVE 800,000: 20% tax rate.
- Above CVE 800,000: 25% tax rate.
Corporate Income Tax (Imposto sobre o Rendimento das Pessoas Coletivas - IRC)
- General Rate: The standard corporate income tax rate in Cape Verde is 25%.
- Small Businesses: For smaller businesses with income under a specific threshold, there may be preferential rates or exemptions, aimed at supporting small and medium enterprises (SMEs).
- Tax Incentives: Cape Verde offers tax incentives for certain sectors such as tourism, agriculture, and technology. These incentives include tax exemptions for businesses operating in designated Free Trade Zones or those engaged in specific investment projects.
2. Value Added Tax (VAT)
Cape Verde has a Value Added Tax (VAT), which is applied to most goods and services, with a few exemptions for basic necessities and certain sectors.
- Standard VAT Rate: The general VAT rate is 15%.
- Reduced Rate: A reduced rate of 8% applies to some goods and services, such as food and medicine.
- Exemptions: Certain services such as health, education, and transportation may be exempt from VAT.
3. Social Security Contributions
Social security in Cape Verde is managed through the Instituto Nacional de Previdência Social (INPS), which provides benefits related to pensions, healthcare, and unemployment.
- Employer Contributions: Employers contribute 8% of their employees' salaries to social security.
- Employee Contributions: Employees contribute 3% of their salaries to social security.
4. Property Taxes
Cape Verde imposes taxes on property ownership, as well as taxes on transactions involving real estate.
- Property Tax: Known as Imposto Predial, this tax is levied on property owners based on the value of the property. The tax rate varies depending on the type and location of the property.
- Land Transaction Tax: When buying or selling land, there is a tax on the transaction value, typically around 5% of the sale price.
5. Excise Taxes
Cape Verde imposes excise duties on certain goods such as alcohol, tobacco, and fuel.
- Excise Duty on Alcohol and Tobacco: Rates vary depending on the type of product and are intended to discourage excessive consumption.
- Excise Duty on Fuel: Cape Verde applies excise taxes to petroleum products, which are an important source of government revenue.
6. Customs Duties
Cape Verde applies customs duties on goods imported into the country. The duty rate depends on the nature of the product.
- General Customs Duties: Generally, customs duties range from 5% to 20%, depending on the type of goods being imported.
- Exemptions: Certain goods, such as raw materials for manufacturing, may be exempt from customs duties.
7. Tax Incentives and Exemptions
Cape Verde offers several incentives to encourage investment and development in certain sectors.
- Free Trade Zones: Companies operating within the Free Economic Zones (Zona Económica Especial - ZEE) are often granted exemptions or reductions in corporate income taxes, import duties, and VAT. These zones aim to attract foreign direct investment in areas such as tourism, services, and technology.
- Tourism and Agriculture: There are also special incentives for businesses in the tourism and agricultural sectors to promote economic growth.
8. Withholding Taxes
Cape Verde applies withholding taxes on certain types of income, including dividends, interest, and royalties.
- Dividends: The withholding tax rate on dividends paid to non-residents is 10%.
- Interest: The withholding tax rate on interest paid to non-residents is 15%.
- Royalties: The withholding tax on royalties is 15%.
9. Tax Administration
The Direção Nacional de Receitas do Estado (DNRE) is the agency responsible for administering and collecting taxes in Cape Verde.
- Tax Filing and Payments: Taxpayers must file annual tax returns. Corporate income taxes are filed annually, while VAT and payroll taxes are typically filed monthly or quarterly, depending on the size of the business.
- Penalties for Non-Compliance: Cape Verde imposes penalties for failure to file taxes or make timely payments. These penalties can include fines and interest on overdue amounts.
10. Double Taxation Agreements (DTAs)
Cape Verde has entered into Double Taxation Agreements (DTAs) with several countries to prevent double taxation of income and encourage foreign investment. These agreements generally provide for reduced tax rates on dividends, interest, and royalties paid between Cape Verde and treaty countries.
Conclusion
Cape Verde's tax system is based on a mix of direct taxes (income tax, corporate tax) and indirect taxes (VAT, excise duties). The government offers tax incentives in certain sectors, including tourism and agriculture, to encourage investment. The tax rates are relatively moderate, with progressive personal income tax rates and standard corporate income tax rates. Taxpayers are required to comply with filing and payment requirements, and the government is actively working to attract foreign investment through various tax incentives.
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