Cape Verde | 2020.09.11
New tax changes and incentives approved (2020 Supplementary State Budget)

Law No. 100/IX/2020, of 11 August 2020, amended the State Budget for 2020, approved by Law No. 69/IX/2019, of 31 December 2019. The new measures take into consideration the current exceptional situation faced by many companies, and are aimed at discharging them of certain obligations and at implementing additional incentives or temporary tax benefits, of which we highlight the following:

1. VAT rate in the tourism and restaurants sector reduced to 10%, notably (i) accommodation services in hotels and similar establishments and restaurant services; (ii) resident touristic operators qualifying as micro, small or medium-sized companies, and all combined services provided and carried out in Cape Verde; and (iii) services provided by companies promoting cultural events, holders of the touristic utility status or authorized under the terms of the law to engage in touristic activities.

2. Incentives for adapting business activities in the context of COVID-19 - Definition of the eligibility criteria for beneficiaries, projects and expenses, and the form of support and incentives (such as a 30% uplift for eligible expenses, which must have been incurred after 25 April 2020) implemented to support the companies in their effort to adapt and invest in their establishments by reason of the COVID-19 pandemic. 

3. Payment in installments of tax debts and possibility of renegotiating extended time periods for payment of tax debts subject of enforcement proceedings - It is possible to negotiate extended time periods for payment in installments (up to 60 installments), without interest, of tax debts accrued before April 2020, provided that they are not covered by the special regime of regularization of debts, and the suspension of tax enforcement proceedings by renegotiating extended time periods for payment (up to 60 installments), without interest.

4. Possibility of paying in installments income taxes due in September and December 2020 (instead of in August and November) and dispensation from paying those installments within the applicable time periods, in instances of effective and significant reduction of activities prior to the relevant date of payment.

5. Recruitment incentives - Granting of (i) deductions to the tax due through the hiring, for a minimum period of 12 months, of unemployed persons registered with the Employment and Professional Education Centers; and (ii) state allowances, during a period of 12 months, to taxpayers covered by the Special Regime of Micro and Small Companies or by the organized accounting regime, that create 5 or more jobs, in the form of payment of 50% of the salaries (up to CVE 25.000) of at least 2 employees.

6. Contribution for payment of professional internship allowances - Increase of the amount of the contribution and extension of the period during which the contribution is available, for interns hired after the effective date of the Supplementary State Budget. 

7. Costs with certification or accreditation of management systems by micro and small companies - These companies may benefit from a monetary contribution of the value of the expenses with certification and accreditation.

8. Issuance of certificates and other documents free of charge - The issuance of certificates or any other documents required for the fulfillment of the measures foreseen in Decree-Law No. 37/IX/2020, of 31 March 2020, and Law No. 83/IX/2020, of 4 April 2020, which set forth exceptional and temporary measures with respect to the COVID-19 pandemic, are free of charge.

9. VAT credit for farmers - On the acquisition of water and electricity used exclusively for the production of water for agricultural activities.

10. Distance learning incentives - Exemption from stamp duty on the granting and use of credits, including on the respective interest and commissions, for the importation or acquisition of laptops, desktops and tablets by educational and professional training institutions located in Cape Verde, as well as by students of said institutions, among others.

11. Exemption of custom duties and VAT - On the importation of (i) automatic machinery for the processing of data and its units (laptops, desktops and tablets) by educational and professional training establishments located in Cape Verde; (ii) underwater fiber optic cables composed of individually hemmed fibers, as well as other materials, utensils and equipment, intended for the EllaLink projects and for the connection of international underwater cables; (iii) materials and equipment intended for the maintenance, construction or restructuring of venues for sporting activities by certain entities; and (iv) photovoltaic panels and other items for the production of electricity and storage of solar energy for the agricultural sector.

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