CABO VERDE Law and Practice Contributed by: Nelson Raposo Bernardo, Joana Andrade Correia, Manuel Esteves de Albuquerque and Júlio Martins Júnior, Raposo Bernardo & Associados
International Business Centre (IBC) of Cabo Verde The Cabo Verdean Agency for Foreign Investment is the entity responsible for granting licences to operate within the IBC, upon previous proposal of the Zona Franca Comercial S.A. The following tax benefits are applicable to entities licensed to operate in the IBC on income from industrial or business activities and services (note that these tax benefits are not applica - ble to entities engaged in tourism, banking, insurance, real estate or construction). CIT benefits Reduced CIT rates of 5%, 3.5% or 2.5% are applica - ble, respectively, to entities that create ten, 20 or 50 jobs. The CIT rate is 2.5% in the case of the creation of four jobs for entities licensed to operate within the IBC. Entities licensed to operate within the IBC will benefit from reduced CIT rates until 2030. Shareholders’ benefits Shareholders of entities licensed to operate within the IBC are exempt from taxation on dividends and inter - est received. VAT and customs duty benefits All the exemptions contained in the VAT regulation and customs law apply. An exemption from customs duties applies with respect to certain goods, equip - ment and materials used within the scope of the activ - ity developed and licensed under the IBC. Maritime Transport (Tonnage Tax) Cabo Verdean tax legislation contains a special regime for the assessment of the taxable profit applicable to maritime transport activities (tonnage tax). Entities licensed in the IBC that carry out activities related to the international maritime transport of per - sons or goods may opt for a special regime for the assessment of taxable profit, provided that they fulfil the following conditions: • all the ships and vessels owned by the taxpayer must be registered in the International Register of Ships of Cabo Verde (further regulation shall be published), and all the activity carried out must be eligible; and
• at least 85% of the total income derives from activ - ities carried out with other entities licensed and operating in the IBC or with non-resident entities. Under the tonnage tax regime, the taxable profit shall be determined by applying the following daily amounts to each eligible ship or vessel: • up to 1,000 net tonnes – the daily taxable income for each 100 net tonnes is CVE646; • from 1,001 to 10,000 net tonnes – CVE566; • from 10,001 to 25,000 net tonnes – CVE307; and • above 25,000 net tonnes – CVE103. No tax credits are available. If there is a change from the tonnage tax regime to the general CIT regime, the tax value of the assets held corresponds to the value resulting from the applica - tion of the general rules contained in the CIT Code, as if the taxpayer had not applied the special regime. In addition, tax losses or any tax credits carried forward that originated during the taxable periods to which the special regime applied are disregarded. Internationalisation of Cabo Verdean Companies A regime that provides for tax and financial incen - tives for investment projects in order to promote the internationalisation of Cabo Verdean companies is in force. The following incentives, to be granted under a contract of not more than three years, apply to inter - nationalisation projects undertaken before 31 Decem - ber 2020 by companies whose head office and place of effective management are in Cabo Verde. CIT benefits Investments that are eligible for the regime of tax ben - efits for internationalisation may benefit from: • a reduction in their CIT rate of up to 50%, applica - ble until the term of the investment contract; and • an exemption from CIT on income obtained by qualified expatriate employees. In addition, a deduction for the creation of employ - ment ranging between CVE26,000 and CVE35,000 for each new job created may apply.
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