There is no special tax regime for groups of companies in Cabo Verde.
Commercial transactions between associated enterprises should be subject to identical terms and conditions to those that would be accepted and agreed between independent entities (arm’s-length principle).
Taxpayers must keep information and documentation regarding their transfer pricing policies on hand. The following taxpayers must prepare a transfer pricing documentation file:
- Entities classified as ‘Large Taxpayers’.
- Entities considered taxed under a privileged tax regime, as defined in the General Tax Code.
- PEs of non-resident entities.
- Other entities designated as such by the tax authorities.
Limitation on the tax deductibility of net financing expenses
Net financing expenses are only deductible up to the higher of the following limits:
- CVE 110 million.
- 30% of earnings before depreciation, net financing expenses, and taxes.
Controlled foreign companies (CFCs)
The CIT Code contains specific CFC rules. Profits or income obtained by non-resident entities that are clearly subject to a more favourable tax regime are imputed to the resident taxpayers subject to CIT that hold, either direct or indirectly, even if through a representative, fiduciary, or intermediary, at least 25% of their share capital, voting rights, or attribution rights over the income or the assets of those non-resident entities.