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.
Country by Country Report
New transfer pricing reporting obligations have been introduced.
The following entities are required to file the “Declaração financeira e fiscal por país”:
- A parent company, resident for tax purposes in Cabo Verde, that is the ultimate parent of a multinational group of companies with a total consolidated income equal or higher than EUR 750 million (with reference to the previous tax year); the statement concerns all the entities that are part of that group;
- In the situations established by law, and in respect of each tax year, an entity resident in Cabo Verde that is not the ultimate parent of a multinational group of companies.
Communication of the reporting entity
Any entity that is resident in Cabo Verde, or a permanent establishment therein of a nonresident, that is part of a multinational group of companies of which an entity is required to file the Country by Country Reporting (as foreseen in the CIT Code), is required to file a statement (through electronic means) in which it identifies itself as the reporting entity, or identifying which entity will report the required information (in the latter case, reference should be made to the country of tax residence).
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.