In Cabo Verde, employers have several tax responsibilities. One of the primary obligations is withholding 8.5% of an employee's gross income for social security contributions. In addition to this, the employer also contributes an additional 16%.

Social Security Contributions

Employers are responsible for withholding 8.5% of an employee's gross income for social security contributions. The employer also contributes an additional 16%.

Withholding Taxes

Employers may need to withhold taxes on certain payments to non-residents. These can include:

Interest

Interest payments may be subject to withholding tax.

Royalties

Royalty payments are generally subject to a 20% withholding tax.

Dividends

Dividend payments are subject to withholding tax, with rates depending on beneficial ownership and holding periods.

Services

Payments to non-residents for services might be subject to a 15% withholding tax.

Other Employer Tax Responsibilities

Employers may also have other tax responsibilities depending on their business activities. These can include:

Customs Duties

Employers importing goods may be liable for customs duties ranging from 0% to 50%.

Special Consumption Tax

This tax applies to certain goods at rates between 10% and 150%. Employers dealing in these goods may need to collect and remit this tax.

Property Taxes

Employers owning property in Cabo Verde may be subject to property taxes.

Stamp Duty

Applicable to various transactions. Employers may need to pay stamp duty in specific business dealings.

Ecologic Charge

Employers involved in activities with environmental impact might be subject to the ecologic charge.

Tourism Tax

Businesses operating in the tourism sector may need to collect and remit the tourism tax.

Employees in Cabo Verde are subject to mandatory deductions from their salaries. These deductions include Income Tax (Imposto Único Sobre o Rendimento – IUR) and Social Security Contributions (Instituto Nacional de Previdência Social – INPS).

Income Tax (Imposto Único Sobre o Rendimento – IUR)

Income tax is withheld directly from employees' salaries. The tax is based on a progressive rate structure. The latest tax brackets and rates can be found within Cabo Verde's Tax Code.

Social Security Contributions (Instituto Nacional de Previdência Social – INPS)

Employees contribute a percentage of their gross salary (around 3%) to the INPS. These contributions are used for social security benefits such as pensions, disability, and sickness.

Other Potential Deductions

Union dues may also be deducted from salaries, if applicable.

Important Considerations

The Tax Code of Cabo Verde is the primary source for up-to-date income tax rates (IUR) and any allowable deductions. It's important to note that income tax rates and social security contributions are subject to potential changes. Therefore, it's always advisable to consult the latest sources or a tax advisor for accuracy.

The standard VAT rate in Cabo Verde is 15%. This applies to most services supplied within the country. However, some essential services, such as healthcare, education, and specific financial services may be exempt from VAT. For the most updated list of exemptions, it's advisable to consult the Tax Code of Cabo Verde.

VAT on Imported Services

Cabo Verde may apply a "reverse charge" mechanism for services received from outside its borders. In this case, the recipient of the service in Cabo Verde is responsible for calculating and paying VAT, even if the supplier is a foreign entity. It's crucial to determine whether a specific imported service is considered taxable under Cabo Verde's VAT regulations.

Important Considerations

VAT implications depend on where a service is deemed to be supplied. Complex scenarios necessitate careful analysis of place of supply rules. Providing services across borders may lead to additional VAT compliance complexities.

Staying Compliant

The primary resource for understanding VAT regulations in Cabo Verde is the country's Tax Code. Consulting a tax specialist in Cabo Verde is recommended for complex situations, international transactions, or to ensure complete VAT compliance for services.

Cabo Verde, an archipelago nation off the coast of West Africa, offers attractive tax incentives to promote investment in both established and emerging sectors.

General Investment Incentives

• Reduced Corporate Income Tax (CIT) Rate: Companies in qualifying sectors may be entitled to a reduced CIT rate of up to 50%. The duration of this benefit depends on the terms of the investment contract.
• Emigrant Investment Incentives: Direct investment made in Cabo Verde by emigrants can qualify for significant benefits including a potential exemption from the taxation of distributed profits and dividends. Additionally, there's a potential exemption of customs duties on the acquisition of relevant construction materials and goods for a first residential house.

Sector-Specific Incentives

• Tourism: Businesses investing in tourism, tourism promotion, and related activities benefit from tax credits, CIT reductions, and exemptions on property tax, customs duties, and stamp duties.
• Industrial Activities: Industrial ventures may receive a CIT credit of up to 50% of their eligible investment costs for activities focused on the production of goods and services. This credit can be carried forward for up to 10 years.
• Renewable Energy: Companies investing in renewable energy production may be eligible for CIT credits, property tax exemptions, and relief from various customs duties.
• Information Technology and Communications (ITC): Businesses in the ITC sector can benefit from tax credits and specific tax regimes tailored to encourage investment and innovation.

Additional Incentives

• Employment Creation Deduction: Companies creating new jobs may be eligible for a deduction of CVE 26,000 to CVE 35,000 for each position created.
• Foreign Tax Credit: Cabo Verdean tax law permits a foreign tax credit to help eliminate double taxation on foreign income taxed outside Cabo Verde.

Important Considerations

Eligibility for tax incentives typically requires that a company adheres to certain specific application procedures and conditions as outlined by the Cabo Verdean government. It's always advisable to consult a tax advisor or legal professional to obtain the most up-to-date and accurate information about tax incentives and ensure your business is eligible before making investment decisions.