Tax laws São Tomé and Príncipe
São Tomé and Príncipe, an island nation in the Gulf of Guinea, has undergone significant tax reforms in recent years to enhance its revenue generation and align with international standards.
Key Components of São Tomé and Príncipe's Tax System:
Value Added Tax (VAT):
- Implementation: A new VAT regime was introduced on June 1, 2023, replacing several prior taxes, including the general consumption tax and specific excise taxes.
- Rates:
- Standard Rate: 15% applied to most goods and services.
- Reduced Rate: 7.5% for essential items such as rice, flour, pasta, bread, milk, and beans.
- Zero Rate: Exports and certain exempt supplies.
- Small Business Provision: Businesses with annual turnover below STD 1 million (approximately USD 45,000) are subject to a simplified regime, paying a 7% tax on monthly turnover.
Corporate Income Tax:
- Rate: The standard corporate tax rate is 25%.
- Tax Incentives: Investments meeting specific criteria may qualify for tax incentives, including exemptions, rate reductions, and accelerated depreciation, as outlined in the Tax Benefits Code.
Import Tariffs:
- Structure: São Tomé and Príncipe applies the Common External Tariff, with rates as follows:
- Category One (e.g., basic products): 5%
- Category Two (e.g., raw materials): 10%
- Category Three (e.g., intermediate products like most food and cosmetics): 20%
- Alcoholic Beverages: Additional specific taxes are levied per liter, with spirits taxed at $1.40, wine at $0.47, and beer at $0.28.
Excise Taxes:
- Specific excise taxes are imposed on products such as alcohol, tobacco, and fuel. For instance, alcoholic drinks are subject to per-liter taxes, with spirits taxed at $1.40, wine at $0.47, and beer at $0.28.
Tax Administration:
- The tax system is undergoing reforms to improve efficiency and compliance. Initiatives include implementing new tax laws, reducing exemptions, and enhancing tax administration practices.
Recent Developments:
VAT Implementation: The transition to a VAT system in June 2023 aims to streamline taxation and broaden the tax base by replacing multiple indirect taxes with a single, more efficient system.
Investment Climate: The government offers various tax incentives to attract foreign investment, including exemptions and reductions in tax rates for qualifying investments.
Conclusion:
São Tomé and Príncipe's tax system is evolving to enhance revenue collection and create a more favorable environment for investment. For detailed and personalized information, consulting the São Tomé and Príncipe Tax Authority or a tax professional is recommended.
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