Cabo Verde

Value-added tax (VAT)

The VAT system in Cabo Verde closely follows the European Union (EU) VAT system and is assessed at the standard rate of 15%.

The standard VAT rate of 15% is a general tax on consumption, applicable to the import and sale of goods and services in Cabo Verde territory.

The VAT rate on the supply of electricity and water to private consumers is 8%.

The taxable base for the following supplies of goods and services, which price is determined by public authorities, is:

• Diesel: 100%.
• Fuel: 100%.
• Petroleum: 10%.
• Butane gas: 16.65%.
• Fuel-oil: 100%.
• Electricity: 100%.
• Tap water from the public supply: 100%.
• Telecommunication services: 100%.

• Road passenger transport and transport of goods by sea: 100%.

• Maritime transport of goods: 100%.

The following transactions are considered to fall outside the scope of VAT:

• The transfer, for consideration or not, of a totality of assets or a part thereof that constitute an undertaking or a part of an undertaking capable of carrying on an independent economic activity.

• Amounts received as compensation declared judicially for total or partial breach of contracts.
• Discounts, allowances, or bonuses granted.
• Amounts paid on behalf of the acquirer of the goods or the recipient of the services.

• Amounts related to packaging, provided they have not been effectively transacted.

Exempt transactions

The VAT regulations establish two types of exempt transactions: exempt transactions without credit and exempt transactions with credit (i.e. zero-rated transactions). VAT incurred is recoverable in as far as the goods and services are used for the purposes of the taxed transactions of a taxable person or for zero-rated transactions.

Exempt transactions without credit include the following:

• Hospital and medical care and closely related activities undertaken by hospitals and centres for medical treatment.
• The provision of medical care through the exercise of their respective professions by physicians, dentists, nurses, and other paramedics, as well as the supply of transport services for sick or injured persons, and the supply of human organs, blood, and milk.
• The supply of services and goods closely linked to welfare and social security work.
• The supply of services and goods closely linked to the protection of children and young people by bodies governed by public law.
• The provision of children's or young people's education, school or university education, including the supply of services and goods closely related thereto.
• The supply of services, and goods closely linked thereto, by non-profit organisations.
• The supply of copyright and art objects by the original creators or their heirs.
• The supply by the public postal services of stamps and stamped paper.
• The supply of certain cultural, educational, technical, and recreational services.
• Garbage removal services.
• Burial and cremation supplies.
• Banking, financial, insurance, and reinsurance transactions, including related services performed by insurance brokers and insurance agents.
• Immovable property transactions (excluding the provision of accommodation in the hotel sector or in sectors with a similar function, the granting of facilities for collective parking of vehicles, the leasing of permanently installed machinery and equipment, and the granting of facilities for exhibitions and advertising).

Exempt transactions with credit (i.e. zero-rated transaction) on imports include the following:

• Supply of essential goods foreseen in Annex I of the VAT Code (e.g. meat, fish, and milk).

• Import of goods whose supply qualifies for exemption.
• Re-import of goods by the person who exported them, in the state in which they were exported, where they qualify for exemption from customs duties.
• Services in connection with the import of goods where the value of such services is included in the taxable amount.
• Import of gold by the central bank.
• Import into ports by sea fishing undertakings of their catches, unprocessed or after undergoing preservation for marketing but before being supplied.
• Import of goods under diplomatic and consular arrangements that qualify for exemption from customs duties.
• Import of goods for the fuelling and provisioning of sea-going vessels and aircraft.

Invoicing

Since June 2021, it has been progressively mandatory to issue electronic invoices.

The State Budget Law of 2024 has updated the concept of 'invoices issued in legal form' that confer the right to deduct input VAT as to foresee only invoices issued electronically.

A self-billing regime has been introduced by the State Budget for 2024, ensuring the possibility of the acquirer to issue an invoice in the name or on behalf of the supplier of goods or services, under certain conditions.

Special VAT regime for e-commerce

The special VAT regime for e-commerce aims at taxing in the Cabo Verdean territory distance selling of goods and the provision of services by taxpayers without a head office, PE, or domicile in Cabo Verde, whenever the acquirer has a head office, PE, or domicile in the national territory. The regime does not apply to remittances above CVE 10,000 or related to products subject to excise duties. Under the regime, it is regarded as a taxpayer the entities that will be listed as large e-commerce players by the government office responsible for the area of finance based on data to be provided by financial institutions.

Customs duties

Customs duties are levied at rates ranging from 0% to 50% on the customs value of most imported goods.

Raw materials or capital goods can be imported with an exemption from customs duties or at a low rate.

Special consumption tax

A special consumption tax is imposed at rates ranging from 10% to 150% on goods that are deemed superfluous, luxurious, or undesirable for economic, social, or environmental policy reasons.

As of 1 January 2024, the alcoholic beverages produced locally are exempt from the ad valorem component, and the fixed component is set for CVE 20 per litre for beer, CVE 30 per litre for wine, and CVE 100 per litre for spirit drinks. Additionally, the State Budget Law for 2024 foresees an additional levy of CVE 120 for each pack of cigarettes.

Vehicles used for transportation, up to 5 tons, are subject to rates of up to 150%, according to their age:

• Up to four years: not applicable.
• More than four and up to six years: 40%.
• More than six and up to ten years: 80%.
• More than ten years: 150%.

Property taxes

A property tax, called Imposto Único sobre o Património (IUP), is levied at the rate of 1.5% in Cabo Verde.

IUP is due on the ownership of immovable property on an annual basis by the owner of the real estate, registered as such on 31 December of the relevant year. The taxable basis corresponds to 25% of the value attributed by the Evaluation Commission.

IUP is also due on the transfer (gratuitously or for a consideration) of real estate, based on the value of the contract declared by the transferee.

Exemption of IUP due on the acquisition is granted to:

• Cabo Verdean emigrants who own saving bank accounts.
• Projects with Touristic Utility Status (see the Tax credits and incentives section for more information).

In taxable transfers (not exempt), IUP is payable by the transferee.

IUP is also due on the capital gains arising from the sale of:

• plots of land for construction if the sales price is more than double the purchase price, and
• buildings or other real estate if the sale price exceeds the purchase price by more than 30%.

IUP on capital gains is normally paid by the transferor, on the highest of the declared price and the official value of the property concerned.

Capital gains obtained by companies that are in the business of buying real estate for resale are not subject to IUP.

Stamp duty

Stamp duty is payable on a wide variety of transactions and documents, at rates that may be set in specific amounts or on a percentage basis.

Stamp duty rates:

* Fixed exchange rate EUR 1 = CVE 100.265 under an exchange agreement between Cabo Verde and Portugal.

Payroll taxes

There are no payroll taxes other than social security contributions (see below).

Social security contributions

Social security contributions are payable by the employee on their gross income at a rate of 8.5% and by the employer at 16%.

Ecologic charge

Cabo Verde's ecologic charge is applied to packing material, whether empty or full, imported or produced internally, non-biodegradable or made out of metal, glass, or plastic.

The ecologic charge varies from CVE 2 to CVE 100 per item, depending on the quantity or weight of the goods.

This fee is due by the local producer or the importer.

Exemptions are available in the case of packing material used in medicine, essential food (e.g. corn, rice, sugar, flour, and milk), and construction (e.g. cement). Packing material that is exported, reutilised, or recycled is also exempt.

Tourism tax

A tourism tax is applied to accommodation in the hotel sector. The tax amounts to CVE 220 per person per night for people over 16 years of age and cannot exceed ten consecutive nights.