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Taxation in Cabo Verde: A Guide for Foreign Investors

Cabo Verde's tax system offers a balanced framework designed to attract foreign investment while ensuring fiscal sustainability, making it an appealing destination for investors in sectors like tourism, renewable energy, fisheries, and digital services. Governed by the Código Geral Tributário (General Tax Code), originally approved by Law No. 47/VIII/2013 on December 20, 2013, and amended by Law No. 86/IX/2020 on April 28, 2020, the system emphasizes transparency and incentives for economic growth. Recent updates, including a reduction in the Corporate Income Tax (IRPC) rate from 21% to 20% for the 2025 fiscal year, reflect ongoing efforts to enhance competitiveness. Administered by the Direcção-Geral dos Impostos (DGI) under the Ministry of Finance, the regime balances direct taxes on income and wealth with indirect taxes on consumption. For foreign investors, key advantages include no restrictions on profit repatriation, double taxation agreements (DTAs) with countries like Portugal and Spain, and exemptions under the Investment Code for priority projects. This article provides a comprehensive overview of the main taxes, rates, incidences, and practical considerations, based on the latest regulations as of October 2025.

Overview of the Fiscal System

Cabo Verde's tax system is categorized into income taxes (Impostos sobre o Rendimento), consumption taxes (Impostos sobre o Consumo), and property taxes (Imposto Único sobre o Património). It applies to both residents and non-residents earning income in the country, with residency defined as spending over 183 days annually or having a permanent establishment. The system promotes formalization through simplified regimes for micro and small enterprises (REMPE), offering reduced rates and compliance burdens. Foreign investors benefit from a 10% flat rate on foreign-sourced income (excluding capital gains, taxed at 10%) and tailored incentives, such as IRPC reductions for projects in special economic zones (SEZs) like those on Sal or Boa Vista. All taxes are denominated in Cape Verdean Escudos (CVE), with an exchange rate of approximately CVE 110 = €1 as of 2025.

Key Taxes for Investors

Income Taxes (Impostos sobre o Rendimento)

Corporate Income Tax (Imposto sobre o Rendimento das Pessoas Coletivas - IRPC)

IRPC targets the profits of corporate entities, including branches of foreign companies. Taxable income is determined as net profit after deductions for allowable expenses, adjusted for non-deductible items like fines or undocumented costs. Entities are classified into two regimes:

  • Simplified Regime for Micro and Small Enterprises (REMPE): Applicable to businesses with annual turnover below CVE 10 million (~€90,000) and fewer than 10 employees. The rate is 4% on turnover, providing a low-compliance option for startups or SMEs.
  • Organized Accounting Regime: For larger entities, with a standard rate of 20% as of 2025 (reduced from 21% to enhance competitiveness). Some sources indicate a headline rate of 22.44% including a 2% surcharge, but the base CIT is confirmed at 20% for most investors.

Resident companies are taxed on worldwide income, while non-residents pay only on Cabo Verde-sourced income. Exemptions or reductions apply under the Investment Code for projects in priority sectors (e.g., 5% rate for SMEs in the first 10 years if turnover is below CVE 10 million). Withholding taxes on dividends, interest, and royalties to non-residents range from 10% to 20%, often reduced by DTAs.

Personal Income Tax (Imposto sobre o Rendimento das Pessoas Singulares - IRPS)

IRPS applies to individuals residing in Cabo Verde (over 183 days) or non-residents earning local income. It covers five categories of income:

  • Category A: Employment income and pensions – Progressive withholding rates (e.g., calculated via a monthly formula), liberatory unless aggregation is opted for.
  • Category B: Business and professional income – 15% withholding (5% for high-value-added activities like scientific, artistic, or technical services by non-habitual residents).
  • Category C: Rental income – 10% withholding, liberatory with option for aggregation.
  • Category D: Capital income (e.g., interest, dividends) – 20% withholding (10% for certain items), liberatory without aggregation.
  • Category E: Capital gains (e.g., gambling, lotteries) – 1% or 20% withholding, liberatory.

For aggregated income subject to final taxation (including undeclared wealth indicators), progressive rates apply:

  • 16.5% on annual income up to CVE 960,000 (~€8,727).
  • 23.1% on CVE 960,001 to CVE 1,800,000 (~€16,364).
  • 27.5% on income above CVE 1,800,000.
  • 10% flat rate for high-value-added activities by non-habitual residents (those registered for tax purposes but not fully resident).

Non-residents benefit from a 10% rate on certain professional services. Recent brackets for monthly withholding include 10% for CVE 150,001-300,000, 15% for 300,001-500,000, 20% for 500,001-800,000, and higher above.

Consumption Taxes (Impostos sobre o Consumo)

Value Added Tax (Imposto sobre o Valor Acrescentado - IVA)

IVA is an indirect tax at 15% on the supply of goods and services in Cabo Verde, as well as imports. It applies to individuals or entities habitually engaged in production, trade, or services. Businesses act as collectors, deducting input IVA from output IVA and remitting the net monthly. Exemptions include medical services, education, social support, professional training, banking/financial operations, insurance/reinsurance, and imports of essential goods (e.g., basic foods, medical supplies). Small businesses under REMPE (turnover < CVE 10 million) may be exempt if not involved in imports/exports.

Special Consumption Tax (Imposto sobre Consumos Especiais - ICE)

ICE is a single-phase indirect tax on specific goods produced, imported, or introduced in Cabo Verde, such as alcohol, tobacco, luxury items, and fuels. The standard rate is 10%, applied to items listed in the ICE Regulation's annex table. Taxpayers include producers, importers, holders for commercial purposes, guarantors, auction buyers, and irregular handlers. Exemptions cover generics (e.g., diplomatic imports) and specifics (e.g., certain fuels for aviation). This tax aims to discourage harmful consumption while generating revenue.

Stamp Duty (Imposto de Selo)

Stamp Duty applies to various taxable events, including corporate operations, property transfers, and documented legal acts. Rates vary by item, up to a maximum of 15%, with some fixed amounts. Taxpayers include notaries, registrars, credit grantors, banks, insurers, and entities intermediating credit/insurance in Cabo Verde. It ensures revenue from transactions without double taxation.

Property Tax (Imposto Único sobre o Património - IUP)

IUP is a municipal tax at 1.5% on:

  • The assessed value of rural and urban properties.
  • Gratuitous or onerous property transfers.
  • Corporate operations requiring public deeds (e.g., amendments to articles, quota transfers).
  • Use or enjoyment of registered vehicles.
  • Capital gains from land valorization, building transfers, or other immovable assets.

Assessments are based on municipal valuations, with payments annual or transactional.

Social Security Contributions

Although not a tax, social security contributions are mandatory and relevant for investors. Managed by the Instituto Nacional de Previdência Social (INPS), the total rate is 24.5% of gross salary: 16% employer and 8.5% employee (some sources cite 15% employer and 9.5% employee). Foreign employees may seek exemptions if contributing equivalently in their home country. This covers pensions, health, and unemployment benefits.

Practical Considerations for Foreign Investors

  • Compliance and Filing: IRPC returns are due annually by April 30; IVA monthly by the 20th. Use the DGI portal (www.financas.gov.cv) for e-filing and NIF (Tax ID) verification. Non-compliance incurs fines up to 200% of due tax.
  • Incentives: Under the Investment Code, foreign projects qualify for IRPC reductions (e.g., 5-15% credits), IVA exemptions on imports, and indefinite loss carryforwards. Apply via CVTI for Establishment Conventions on exceptional projects.
  • DTAs and Non-Residents: Agreements with 10+ countries reduce withholding (e.g., 10-15% on dividends). Non-residents enjoy 10% flat rates on services.
  • Challenges: Portuguese-language forms may require local advisors; audits focus on transfer pricing. Budget for IUP on real estate investments.
  • Updates: With the 2025 CIT cut to 20%, Cabo Verde ranks competitively in Africa. Consult DGI or firms like PwC for personalized advice.

Conclusion

Cabo Verde's tax regime, with competitive rates like 20% IRPC and 15% IVA, combined with robust incentives, positions it as a gateway for Atlantic investments. By prioritizing simplicity and foreign-friendly policies, the system supports sustainable growth. Foreign investors should engage CVTI early to maximize benefits and ensure compliance in this rising archipelago economy.