Cape Verde | State Budget for 2017

The State Budget for 2017, approved by Law 5/IX/2016, was published in the Official Gazette on December, 30, 2016 and becomes effective as from 1 January 2017. The Bill introduces significant amendments to the tax codes as further detailed below.

Corporate Income Tax (“IRPC – Imposto sobre o Rendimento das Pessoas Coletivas”)
The participation exemption regime is extended at the level of the recipient of the dividends, no requirements to be met by the entities involved. Resident entities with a Corporate Income Tax rate reduction have a 50% tax relief.

The taxable basis for the autonomous taxation has been limited, expressly excluding certain expenses, such as daily allowances paid to employees when not exceeding the legal limits (car mileage, interest free loans). On the other hand the 10% autonomous taxation does not apply during the first three years of activity nor for huge investments subject to depreciation. Finally, Category B taxpayers subject to the organised accounts regime are not subject to autonomous taxation.

Personal Income Tax (“IRPS – Imposto sobre o Rendimento das Pessoas Singulares”)
Income from dividends and profits distribution, received by individual shareholders, partners or associates, obtained from equity stakes of local entities subject and not exempt from IRPC, is fully exempt from IRPS. Under the previous regime, the exemption was limited to 50%.

The withholding tax rate applicable to Category B (business and professional income) and Category C (rental income) was reduced from 20% to 15% and 10%, respectively.

Tax Benefits - The Tax Benefits Code (“CBF”)
Was amended in order to lower the threshold for acceding to tax incentives under the contractual regime, whereas the minimum investment amount was brought down from 3,000,000,000 CVE to 550,000,000 CVE and the creation of jobs was reduced from 100 to 10.

The 50% investment credit was extended into health, ambient and creative industry sectors and the period of deduction of credit for investment was extended to 15 years (previously 10 years).

The term of the exemption on the income from securities market, with public offerings and listings on Cabo Verde Stock Exchange (“BVC”) was extended until 2025 (previously 2017).

Micro and Small Business
The Special Regime for Micro and Small Business was subject to significant amendments, being applicable for a minimum period of five years. We would like to highlight the following amendments:

  • Introduction of the concept of Micro and Small Importers (“MPI” – Micro e Pequenos Importadores) for purposes of application of the simplified regime for micro and small companies
  • Self-employed professionals may now benefit again from the special regime for Micro and Small Business
  • Micro and Small Business are exempt from the payment of income tax provided that the annual turnover doesn’t exceed 1,000,000 CVE

Stamp Duty (“IS” – Imposto do Selo)
An exemption is now available for housing credits for permanent abodes (acquisition, construction or improvement, as well as interest and commissions charged), provided that the loan does not exceed 7,000,000 CVE.

A few other exemptions are now granted regarding registry acts made in Sal, Boa Vista, São Vicente and Maio islands, under the implementation of the land registry as set forth under Law Nr. 33/VII/ 2008, of 8 December.

Exceptional Debt Settlement Regime
Finally, the State Budget 2017 approved an Exceptional Debt Settlement Regime including tax debts and social security contributions which payment deadline expired on October, 31st, 2016. This regime also includes tax enforced collection proceedings initiated until the abovementioned date.


All information contained herein are of general nature and for informational purposes only. It does not therefore intend to be nor shall be construed as legal advice on any of the matters addressed.