CABO VERDE Law and Practice Contributed by: Nelson Raposo Bernardo, Joana Andrade Correia, Manuel Esteves de Albuquerque and Júlio Martins Júnior, Raposo Bernardo & Associados
The employees covered by the collective dismissal are entitled to compensation, the amount of which depends on the date the employee was hired. Individual Dismissal for Just Cause Under certain circumstances, the employer can termi - nate the contract for just cause. The concept of just cause includes disciplinary dismissal and other forms of dismissal, provided that they are justified according to the law. For dismissal based on unlawful conduct of the employee, the concept of just cause is the centrepiece of the matter and consists of the impossibility in prac - tice of continuing the employment relationship due to the seriousness of the employee’s misconduct. When dismissed with disciplinary cause, the employee is not entitled to any compensation. If the dismissal is not justified according to the law or if the employer does not comply with the proper pro - ceeding, the termination of the contract can be con - sidered null and void. The contract remains in force, which can lead to reinstatement or compensation. Termination by the Employee The employee may terminate the employment contract at any time without any reason or explanation, but is obliged to give prior notice to the employer, which varies between 15 days and two months depending on the duration of the contract. 4.5 Employee Representations The right to form an employee representative body in any company, regardless of its size, is guaran - teed by the Cabo Verdean Constitution. The initiative depends completely on the employees, which means that employers are under no obligation to implement this form of representation. 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers Employees are subject to personal income tax (PIT) under two tax methods:
• the declarative (self-assessment) method; and • the final withholding method. Employees are taxed according to category A (employment income), based on their residence or non-residence status. For PIT purposes, an employee is deemed resident in Cabo Verde if they: • spend more than 183 days in aggregate in Cabo Verde during a calendar year; or • stay fewer than 183 days therein and maintain a residence said to be the habitual residence in Cabo Verde with reference to December 31st of a given year. Declarative Method Under the declarative method, individuals are taxed according to their annual income statement. This method is mandatorily applicable to taxpayers taxed under category B (business and professional income) with standard organised accounting, and to taxpayers taxed under category C (rental income). This method is also applicable to dependent workers (category A) who opt to file their tax return on income obtained abroad by resident taxpayers, and on income obtained in Cabo Verde by non-resident taxpayers that could not be taxed at flat rates. Income will be subject to taxation at rates ranging between 16.5% and 27.5%, as follows: • up to CVE960,000 – 16.5%; • CVE960,000 to CVE1.8 million – 23.1%; and • over CVE1.8 million – 27.5%. An exemption from taxation applies to net income of The final withholding method is used to collect taxes when taxpayers are not obliged to submit their annual income statement in the following cases. Category A – employment and pensions This income is generally subject to monthly withhold - ing tax (WHT). Employment income is specifically defined in the PIT Code and covers all payments in connection with work (employment contract), such as up to CVE220,000 annually. Final Withholding Method
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