CABO VERDE LAW AND PRACTICE Contributed by: Nelson Raposo Bernardo, Joana Andrade Correia, Manuel Esteves de Albuquerque and Mafalda Contumélias Batista, Raposo Bernardo & Associado s
the proper proceeding, the termination of the contract can be considered null and void. The contract remains in force, which can lead to rein -
• stay fewer than 183 days therein and maintain a residence said to be the habitual residence in Cabo Verde with reference to December
statement or compensation. Termination by the Employee
31st of a given year. Declarative Method
The employee may terminate the employment contract at any time without any reason or expla - nation, 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 guaranteed by the Cabo Verdean Constitu - tion. 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
Under the declarative method, individuals are taxed according to their annual income state - ment. This method is mandatorily applicable to taxpayers taxed under category B (business and professional income) with standard organised accounting, and to taxpayers taxed under cate - gory C (rental income). This method is also appli - cable 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 taxpay - ers that could not be taxed at flat rates. Income will be subject to taxation at rates rang - ing 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 up to CVE220,000 annually. Final Withholding Method 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 with - holding tax (WHT). Employment income is spe - cifically defined in the PIT Code and covers all payments in connection with work (employment contract), such as salary, bonuses, commis - sions, pensions, allowances (eg, cost-of-living
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