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
year, to be paid quarterly. SST replaced the cor - porate income tax (CIT), fire brigade surtax and VAT, as well as the contribution to social security due from the company. Under the PIT Code, a single act is considered a taxable operation performed twice during the tax year. Category C – rental income Rental income is subject to WHT at the rate of 20% as an advance payment on account of the final annual income tax liability. To compute the net income, taxpayers may deduct maintenance and repair expenses of up to 30% of gross rental income. Category D – investment income In general, investment income is subject to a flat rate of 20%, although dividends and interest on bonds are subject to a flat rate of 10%. A special tax regime contained in the Tax Ben - efits Code provides for the following: • an exemption from taxation on interest on term deposits received by Cabo Verdean emigrants; • income derived from bonds or similar prod - ucts (except debt securities listed in the secu - rities market) obtained before 31 December 2017 benefits from a 5% flat rate; and • dividends from shares listed in the stock exchange, placed at the disposal of their holders before 31 December 2017, are exempt from PIT. Category E – capital gains Capital gains earned by individual taxpayers are subject to a flat rate of 1% in the case of gains on the disposal of immovable property, intel - lectual property or shareholdings. A flat rate of
20% applies in the case of gains on gambling, lottery participation, betting, and prizes awarded in sweepstakes or contests. 5.2 Taxes Applicable to Businesses Cabo Verde’s corporate income tax (CIT), called imposto sobre o rendimento das pessoas colectivas , is levied on profits obtained within the Cabo Verdean territory and those obtained outside by resident companies (worldwide prin - ciple). Non-resident companies with a perma - nent establishment (PE) in Cabo Verde are also subject to CIT on Cabo Verdean-source income attributable to the PE. Taxable profit is computed according to the local accounting rules and adjusted for tax purposes. For the purposes of determining taxable income, CIT payers can be taxed under two methods/ regimes, as follows. • A special regime for micro and small-sized companies: (a) micro-sized companies are entities that employ up to five persons, with an annual turnover (gross amount of sales and ser - vices) that does not exceed CVE5 million; (b) small-sized companies are entities that employ between six and ten persons, with an annual turnover of between CVE5 mil - lion and CVE10 million; and (c) micro and small importers import goods with a customs value that does not ex - ceed the value of turnover on an annual basis for the purpose of qualifying un - der the simplified scheme for micro and small-sized companies. • A standard organised accounting regime – the standard/normal regime under which the computation of profits follows the local accounting rules.
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