Law No. 69/IX/2019, of 31 December 2019, approving the Cape Verdean State Budget for 2020 (2020 SB) was published in the Official Gazette. The 2020 SB has not introduced changes to the main tax codes, which remain unchanged. In relation to tax measures foreseen annually, there have been a few changes in relation to benefits and incentives established in the 2019 SB enhancing the productive investment and for companies. Here are the main changes:
New tax benefits and incentives:
- Incentives for financing certain Cape Verdean companies through share capital contributions in cash, which may deduct, subject to certain requirements, part of these contributions up to 2% of the tax assessed in the previous year;
- Uplift of expenses with certification or accreditation of quality management systems, products, processes and services made in Cape Verde or abroad by 130% of their value;
- Exemption until 2021 of Personal Income Tax (IRPS) of certain income from term deposits constituted with Restricted Authorization Credit Institutions (ICAR) relating to contracts entered into until 31 December 2018, and exemption from stamp duty in relation to acts and operations carried out;
- Incentives to electric and hybrid mobility, with the importation of electric and hybrid vehicles being exempt from VAT and Excise Duty, and the importation of recharging batteries and other components intended for their charging being exempt from VAT and Custom Duties. Such vehicles are also exempt from Parking Tax;
- The eligible age for incentives related to companies employing young people is extended to 37 years;
- Exemption of Single Property Tax (IUP) on the transfer of rural properties, as well as on gains resulting from the disposal for consideration of in rem rights over rural properties used for commercial or industrial activities, to farmers and livestock farmers in relation to the regularization of rural properties;
- Creation of opportunities in the local market, with the State being able to grant, under concession, lands to Cape Verdean companies for the implementation of investment projects.
Tax benefits and incentives that are maintained:
- Youth Start-up incentives;
- Exemption of customs duties on importation of taxis;
- Incentives to the importation of collective passenger transport vehicles and light passenger vehicles for purposes of executive transport;
- Incentives to the importation of heavy transport vehicles for tourists;
- Incentives (social security) for employers hiring young people;
- Exemption of administrative fees due on certificates for compliance with tax obligations;
- Exemption from the payment of fees due for fishing licenses by artisanal fishing vessels up to 5 tons;
- Tax incentives under the project for the implementation of digital terrestrial television;
- Direct incentive to professional internships;
- Co-funding of professional internship allowances;
- Interest rate subsidy for micro production of renewable energy;
- Incentives for the importation of food, medicines and irrigation materials;
- Incentives for water desalination used in agriculture.
Tax benefits and incentives abolished:
- Incentives to savings and credit cooperatives and microbanks.
The Law which approved the 2020 SB comes into force on 1 January 2020.
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