In Sao Tome and Principe, employers have specific legal responsibilities concerning tax contributions for their employees.

Social Security Contributions

Employers are required to contribute 8% of the employee's gross salary to social security. These contributions must be paid monthly to the National Institute of Social Security (INSS).

Corporate Income Tax (CIT)

The Corporate Income Tax Rate is 25% of taxable profits. However, certain small businesses may qualify for lower rates. Taxpayers generally file and pay CIT annually. Your specific deadlines and the option for installments may depend on the size and nature of your business.

Withholding Tax

Employers are obligated to withhold personal income tax (PIT) from employee salaries at the time of payment. These amounts are then remitted to the tax authorities.

Other Taxes

Employers may have additional tax responsibilities related to specific circumstances, such as property taxes or specific industry levies.

Please note that tax laws and regulations are subject to change. Always consult with a qualified tax advisor or accountant in Sao Tome and Principe for the most updated information and guidance concerning your specific obligations.

In Sao Tome and Principe, employees are subject to certain tax deductions. These deductions primarily fall into two categories: Personal Income Tax (PIT) and Social Security Contributions.

Personal Income Tax (PIT)

All individuals earning income in Sao Tome and Principe are subject to PIT. The country uses a progressive income tax system. PIT is calculated on taxable income, which is determined after deducting allowable personal exemptions and other deductions.

Social Security Contributions

All employees in Sao Tome and Principe are liable for social security contributions. The employee contribution rate is 6% of the gross salary. These contributions are calculated as a percentage of the employee's gross salary.

In Sao Tome and Principe, services are generally subject to Value-Added Tax (VAT).

VAT Rates

The standard VAT rate in Sao Tome and Principe is 15%, which applies to most services. However, a reduced rate of 7.5% is applicable to certain basic necessities such as specific food items. There are also some services that may be exempt from VAT, including financial services and medical and educational services.

VAT Filing and Payment

Businesses with an annual turnover exceeding a specific threshold are required to register for VAT. The exact threshold may change periodically. VAT returns are generally filed on a monthly or quarterly basis, depending on the company's turnover. VAT payments are typically due at the time of filing the return.

The government of Sao Tome and Principe offers a variety of tax incentives to stimulate domestic and foreign investment, aiming to boost economic growth across various sectors.

Types of Tax Incentives

There are several tax benefits available, depending on the nature of your business and its contribution to the economy. Here's a breakdown of some key categories:

• Corporate Income Tax Reduction:
  Businesses in specific sectors, like tourism, agriculture, or those utilizing new technologies, can qualify for a significant reduction in corporate income tax for a set period.

• Import Duty and Tax Exemptions:
  Companies involved in local or international trading can benefit from exemptions or reduced import duties on equipment and goods not readily available in Sao Tome and Principe.

• Simplified Regime Incentives:
  Businesses opting for the simplified tax regime receive a portion of the standard tax benefits.

• Other Incentives:
  Additional benefits may include reduced stamp duty tax, exemptions on income tax for capital investment, and accelerated depreciation for specific assets.

Qualification Criteria

The specific criteria for availing these incentives vary based on the type of benefit and the targeted sector. Generally, to qualify, your business may need to:

• Demonstrate a minimum investment threshold (often €50,000).
• Operate in a prioritized sector as defined by the government (e.g., tourism, agriculture, technology).
• Contribute to job creation and economic development.
• Meet specific requirements related to technology adoption, export generation, or local sourcing.

It's crucial to consult the latest version of the Sao Tome and Principe Tax Benefits Code and Investment Code for the most up-to-date qualification criteria.

Application Process

The application process for tax incentives typically involves submitting a formal request to the relevant government authority. This may involve:

• Completing application forms outlining your business details, investment plans, and expected contribution to the economy.
• Providing supporting documentation, such as business registration documents and feasibility studies.
• Securing approvals from relevant ministries depending on the targeted sector.