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
and housing allowances) and benefits in kind (eg, company cars), regardless of where the pay - ment originates. Board members’ remuneration is taxed as employment income. The following types of income are exempt from PIT: • per diems for national and international trips, for the portion that does not exceed the limits set for the public services; • lunch allowance, up to CVE250 per day; • the use of a personal car, up to CVE120,000 per year; • a cash shortage allowance, of up to 15% of the monthly salary; • a family allowance, of up to CVE500 per month, for each dependant or equivalent and ancestors; and • redundancy payments, which are taxable on the portion that exceeds one and a half times the average remuneration paid during the last months of employment, multiplied by the number of years of employment. As a rule, the monthly WHT is levied as final taxation, unless the taxpayer opts to file the tax return, in which case the tax withheld has the nature of an advance payment on account of the final annual income tax liability. The monthly tax withholdings due are calculated by apply - ing the following progressive WHT rates and the corresponding deduction to the taxable income: • up to CVE80,000 – WHT is 15% with a CVE5,500 deduction; • CVE80,000 to CVE150,000 – WHT is 21% with a CVE10,300 deduction; and • over CVE150,000 – WHT is 25% with a CVE16,300 deduction.
Employees and managers or directors of the company are liable to social security contri - butions of 8.5% on their gross remuneration. Employers are liable to social security contribu - tions of 16% on the same gross remuneration received by employees and managers or direc - tors of the company. Category B – business and professional income Business and professional income earned by individual entrepreneurs is taxed under the fol - lowing regimes: • standard organised accounting; • Special Regime for Small and Micro-Sized Companies (SRSMC); and • single act ( ato isolado ). Business and professional income earned by individual entrepreneurs under standard organ - ised accounting is subject to WHT at the rate of 20% as an advance payment on account of the final annual income tax liability. Net income is computed under the rules applica - ble to companies, with the adjustments provided for in the PIT Code and subject to income tax at the applicable PIT rates. Net income is computed according to the dec - laration-based method ( método declarativo ), where tax is levied on the aggregate base of the relevant income categories in the household minus personal deductions and allowances. Business and professional income earned by individual entrepreneurs under the SRSMC is subject to a flat rate of 4%. Under this regime, micro and small-sized companies are subject to a Single Special Tax (SST) of 4% levied on the gross amount of sales obtained in each taxable
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