Cabo Verde

Foreign Investor Status (Estatuto do Investidor Externo)

The Foreign Investor Status, which has granted some tax benefits at the level of the investor (e.g. exemption from WHT on distribution of profits and on interest related to the financing of the investment) was revoked by the New Investment Law effective as of 1 January 2013. The tax benefits already granted or for which recognition has been requested prior to the entry into force of the Tax Benefits Code (TBC) and the Investment Code are maintained. Investment projects submitted for analysis and approval to the competent authorities prior to the entry into force of the Tax Benefits Code continue to be regulated under the legislation in force at the date of the respective submission.

Contractual tax benefits

There are exceptional incentives regarding customs duties, CIT, personal income tax (PIT), property tax, and stamp duty to investments that fulfil all of the following conditions:

• The promoter of the investment should possess technical and managerial capacities.
• The invested amount should exceed CVE 3 billion (formerly CVE 550 million); the relevant amount is of CVE 1.5 billion in case of investments located in a municipal area where the average GDP per capita is lower than the national average (with reference to the last three years).
• Create, directly, at least 20 qualified jobs (10 in case of investments located in a municipal area where the average GDP per capita is lower than the national average, with reference to the last three years); a qualified job requires professional or higher education, specialised technical training, certified by a national or foreign entity, including management positions.

The concession of contractual tax benefits is subject to approval by the Council of Ministers upon agreement.

Research and development (R&D) incentive (regime de incentivos fiscais em investigação e desenvolvimento empresarial)

Cape Verdean tax resident companies carrying out commercial, industrial, or agricultural activities, and non-resident companies with a PE in the Cabo Verde territory, are allowed to deduct from the CIT due, up to the respective amount, the value of eligible expenses incurred with R&D, in a double percentage as follows:

• Base rate: 40% of the expenses incurred in the tax period concerned. This rate in increased by 15% in case of taxpayers with less than two years of activity that have not benefited from the incremental rate mentioned below).
• Incremental rate: 50% of the added expenses incurred in the tax period concerned with reference to the arithmetic average of the two previous tax years.

Expenses that, due to insufficient tax due, cannot be deducted in the tax year they were incurred can be carried forward for ten years.

Eligible taxpayers

The CIT deduction is available to taxpayers:

• taxed under the organised accounting regime
• with accounts that follow the Cabo Verde generally accepted accounting principles (GAAP)
• that fulfil their tax obligations electronically
• not subject to indirect taxation methods
• with investment projects registered in the single investment one-stop-shop (Balcão Único de Investimento)
• that have not held share capital of a company whose activity ceased less than five years ago with irregularities in the tax situation, and
• that have their tax and social security situation duly regularised.

Covered R&D expenses

For the purposes of the regime:

• Research expenses are those incurred by the taxpayer aiming at acquiring new scientific or technical knowledge.
• Development expenses are those incurred by the taxpayer through the exploitation of results from scientific work, or other scientific or technical knowledge, aiming at finding or improving in a substantial manner raw materials, products, services, or manufacturing processes.

Eligible expenses

Among other expenses, the following are eligible provided that they are related with R&D activities:

• Acquisition of tangible fixed assets (except buildings and land), created or acquired new, and the proportion of its allocation to R&D activities.
• Expenses with staff with minimum qualification as a level 4 of the National Qualifications Framework that is directly engaged in R&D activities. These expenses are considered for 150% of the respective amount in case of staff with minimum literary qualification as a level 8 of the National Qualifications Framework.
• Expenses with the participation of managers and members of the board in the management of R&D institutions.
• Operating expenses (remunerations, wages, or salaries of the year concerned) of up to 50% of the expenses with staff with minimum qualification as a level 4 of the National Qualifications Framework that is directly engaged in R&D activities.
• Expenses incurred with the hiring of R&D activities from public entities, entities with public utility status, or entities with recognised expertise in the field of R&D.
• Holding share capital of R&D institutions and contribution made to public and private investment funds. In both cases, the entities should invest in the equity of R&D or other institutions with recognised expertise in the field of R&D.
• Registration and maintenance of patents.
• Acquisition of patents aiming mainly at carrying out R&D activities.
• R&D audits.
• Demonstration actions related to supported R&D projects.
• Attribution of scientific awards to R&D activities.
• Attribution of PhD and post-PhD scholarships.

There is an exclusion from eligibility of the expenses with projects carried out exclusively by third parties through R&D contracts and rendering of services.

R&D activities related to ecological manufacturing of products are allowed an additional 30% deduction.

The regime applies until 2038.

Incentive to the reinvestment of profits

An exemption from CIT applies on profits reinvested by technological-based companies duly authorised to operate in the Special Economic Area for Technologies (Zona Económica Especial para Tecnologias or ZEET). This includes any company carrying out R&D activities, either internally or in association with third parties, aiming at creating new or improved products, services, and processes.

The following are eligible as technological-based companies:

• Companies that have invested in R&D an amount equivalent to at least 7.5% of the previous year invoicing. Accounting elements demonstrating the invoicing volume and R&D investment volume are required.
• Companies with up to three years of activity, incubated in a certified incubator or an incubator recognised as such by Pro Empresa.

Differentiated Merit Investment Projects (Projetos de Mérito Diferenciado or PMDs)

The PMD status, established by Law 80/IX/2020, of 26 March, is granted to investments that, among others, cumulatively meet the following requirements:

• Represent an investment equal to or greater than CVE 1.5 billion.
• Contribute, in net terms, to the improvement of the balance of payments.
• Use technology, production, and commercialisation processes that minimise environmental impacts or promote environmental sustainability.
• Have a recognised productive social effect, particularly in the creation of at least five qualified jobs (those that require specialised technical training, either professional or of higher education, including management positions).

Investment projects with PMD status are granted the following benefits:

• Reduced customs duty rate of 5% on the import of materials, goods, and equipment mentioned in Article 15 of the CBF.
• Customs duty exemption on the import of raw materials, consumables, finished and semi-finished materials, and other products to be incorporated in products manufactured by the company; the exemption is also applicable to packaging and wrapping materials used in products manufactured by the company, in case of industrial investment, projects of companies registered in the 'Cadastro Industrial'.
• CIT credit of 30% of the eligible investments effectively made (capped at 50% of the CIT assessed).
• Stamp duty exemption on the borrowing of funds for the investment.
• IUP exemption on the acquisition of real estate exclusively aimed at the installation of the investment project.
• Other non-tax incentives established in specific legal diplomas.

Alongside the above benefits, for PMDs implemented in municipal areas with a GDP per capita lower than the national average, there are the following added benefits:

• CIT credit of 40% of the eligible investments effectively made (capped at 50% of the CIT assessed).
• IUP exemption on the acquisition of real estate used in the development of the company’s main activity, including any developing needs arising throughout the first five years following the acquisition.

Direct investment made in Cabo Verde by emigrants

Direct investment made by emigrants shall benefit from a set of tax incentives, as established by Law 73/IX/2020, of 2 March, namely:

• Exemption from taxation (as foreseen in the CIT Code) of dividends and profits distributed to the emigrant investor arising from authorised foreign investment.
• Exemption from customs duties on the acquisition of materials from construction, extension of refurbishment of a first residential house, including also furniture, appliances, and other imported goods, under certain conditions.

The regime applies to emigrant investors permanently living abroad, as well as to former emigrant pensioners and retired people receiving pensions and similar income from their country of immigration.

The investment on tangible assets or intangibles in Cabo Verde is eligible, under the conditions foreseen in the regime (e.g. the incorporation of entities or branches in Cabo Verde, acquisition of shareholdings, granting of loans or other forms of financing of entities in which a shareholding is held).

Industrial activity

The following tax and customs benefits are provided for industrial activity:

CIT benefits

A CIT credit is available for up to 50% of the eligible investments made in an industrial activity. Any unused tax credit may be carried forward for ten years, subject to certain limitations.

Eligible investments include the acquisition of new fixed assets, patents, and licences regarding technologies.

IUP benefits

Industrial activities may benefit from an exemption from IUP on the acquisition of immovable property used exclusively for industrial purposes; however, the recognition of such tax exemption should be approved by the municipality.

Customs duty benefits

Industrial activities benefit from an exemption from customs duties on the import of construction material, machines, utensils, semi and finished materials, products, and raw materials used in the production of goods.

Stamp duty benefits

Financing transactions of industrial projects are exempt from stamp duty.

International Business Centre (IBC) of Cabo Verde

The Cabo Verdean Agency for Foreign Investment is the entity responsible for granting the licences to operate within the IBC, upon previous proposal of the Zona Franca Comercial S.A.. The following tax benefits are applicable to entities licensed to operate in the IBC on income from industrial or business activities and services.

Note that these tax benefits are not applicable to entities engaged in tourism, banking and insurance, real estate, or construction.

CIT benefits

Reduced CIT rates of 5%, 3.5%, or 2.5% are applicable to entities that create, respectively, 10, 20, or 50 jobs.

The CIT rate is 2.5% in case of the creation of four jobs for entities licensed to operate within the International Service Centre.

Entities licensed to operate within the IBC are granted to benefit from reduced CIT rates until 2030.

Shareholders benefits

Shareholders of the entities licensed to operate within the IBC are exempt from taxation on dividends and interest received.

VAT and customs duty benefits

An exemption from customs duties applies with respect to certain goods, equipment, and materials used within the scope of the activity developed and licensed under the IBC.

Maritime transport (tonnage tax)

Cabo Verdean tax legislation foresees a special regime for the assessment of the taxable profit applicable to maritime transport activities (tonnage tax).

Entities licensed in the IBC that carry out activities related to the international maritime transport of persons or goods may opt for a special regime for the assessment of the taxable profit, provided that they fulfil the following conditions:

• All the ships and vessels owned by the taxpayer must be registered in the International Register of Ships of Cabo Verde (further regulation shall be published), and all the activity carried out must be eligible.
• At least 85% of the total income derives from activities carried out with other entities licensed and operating in the IBC or with non-resident entities.

Under the tonnage tax regime, the taxable profit shall be determined by applying the following daily amounts to each eligible ship or vessel: 

Net tonnage	Daily taxable income for each 100 net tonnes (CVE)
Up to 1,000 net tonnes	646
From 1,001 to 10,000 net tonnes	566
From 10,001 to 25,000 net tonnes	307
Above 25,000 net tonnes	103

No deductions are allowed to the taxable profit assessed. The taxable profit assessed is subject to CIT at the rates applicable to entities licensed in the IBC.

No tax credits are available.

In the case of changing from the tonnage tax regime to the general CIT regime, the tax value of the assets held corresponds to the one resulting from the application of the general rules foreseen in the CIT Code, as if the taxpayer had not applied the special regime. Additionally, tax losses or any tax credits carried forward originated during the taxable periods to which the special regime applied are disregarded.

Tax and financial incentives for internationalisation of Cabo Verdean companies

A regime that provides for tax and financial incentives for investment projects in order to promote the internationalisation of Cabo Verdean companies is in force.

The following incentives, to be granted under a contract of not more than three years, apply to internationalisation projects of companies with head office and place of effective management in Cabo Verde that are undertaken before 31 December 2020.

CIT benefits

Investments that are eligible for the regime of tax benefits for internationalisation may benefit from:

• Reduced CIT rate of up to 50%, applicable until the term of the investment contract.
• Exemption from CIT on income obtained by qualified expatriate employees.

Additionally, a deduction for creation of employment ranging between CVE 26,000 and CVE 35,000 for each new job created may apply.

IUP benefits

An exemption from IUP may be available on the acquisition of immovable property for the establishment or expansion of the activity of the investor.

Stamp duty and other benefits

An exemption from stamp duty is available on the incorporation of companies on an increase of share capital of existing companies, and on financing transactions.

An exemption from notary and registration fees is available on the incorporation and registration of companies.

Tourist Utility Status (Estatuto de Utilidade Turística)

Cabo Verde may grant Tourist Utility Status to certain touristic projects. Tourist Utility Status is granted to the following types of tourist projects:

• Installation, granted to new tourist resorts and facilities.
• Operation and exploitation, granted to existing tourist resorts and facilities.
• Refurbishment, granted to existing tourist resorts and facilities in connection with improvements and expansions.

Tourist Utility Status generally allows for the following tax incentives and benefits:

• CIT credit of up to 30% of the eligible investments made in tourism, touristic promotion activities, and real estate tourism project investment.
• Exemption from IUP on the acquisition of real estate used for construction and installation of touristic projects if granted by the municipality.
• Reduced rate of 5% of customs duties on the importation of materials and equipment used in touristic projects.
• Exemptions from stamp duty on the financing of tourism investments.

Incentives for renewable energies

Interest rate support for micro production of renewable energies

Interest rate support of 50% is granted on the interest on loans borrowed from financial institutions by families and by duly incorporated micro and small companies for the acquisition of equipment and installation services aimed at the micro production of renewable energy in accordance with the applicable legislation.

This support shall apply to final consumers covered by the normal low voltage category.

Independent and self-production of electricity based on renewable energy sources

There is a regime for promotion, encouragement, and access, licensing, and exploitation inherent to the exercise of independent production and self-production of electricity based on renewable energy sources.

Water, wind, solar, biomass, biogas or industrial, agricultural or urban waste, oceans and tides, and geothermal are to be considered sources of renewable energy. Under the regime, renewable energy producers may benefit from the following.

CIT benefits

A CIT credit is available for up to 30% of the eligible investments made in renewable energies projects.

Customs duty benefits

A reduced rate of 5% of customs duties and other customs charges applies on the importation of capital goods, raw materials and supplies, finished and semi-finished products, and other materials that are incorporated or used in the production of goods or services involved in the production of electrical energy from renewable sources.

IUP and stamp duty

Exemptions from IUP and stamp duty are granted on the acquisition of immovable property and other assets related to the investment project or its financing.

Incentives to the production of renewable energies

An exemption from customs duties applies on the import of new and modern equipment and respective accessories to produce renewable energies. This includes solar panels, wind generators, and other appliances able to produce energy based on renewable energy sources. Said equipment shall also contribute to improve environmental protection, reduce the national dependency on oil products, and foster the use of renewable energy sources.

Shipping transport industry incentive

CIT benefits

A CIT credit is available for up to 30% of the eligible investments made in shipping, air, and sea transportation projects.

Customs duty benefits

A reduced rate of 5% from customs duties applies on the importation of shipping material for the maintenance, production, and repair of shipping and respective equipment.

IUP and stamp duty

Exemptions from IUP and stamp duty are granted on the acquisition of immovable property and other assets related to the investment project or its financing.

Job creation incentives

Entities taxed under the verification method are entitled to deduct the following amounts for each created permanent job:

• CVE 26,000 for each job created in the municipalities of Boa Vista, Praia, and Sal.
• CVE 30,000 for each job created in the remaining municipalities.
• CVE 35,000 in case of a disabled person.

Media, telecommunications, and Internet

Importation of goods, materials, equipment, vehicles, and other equipment exclusively for the purpose of telecommunications and media are exempt from customs duties.

Incentives on the import of vehicles

The following exemptions from excise duty and VAT are granted for 2024:

• On the import of heavy passenger vehicles for collective transport of passengers comprising more than 30 seats, including driver, when imported by duly licensed companies operating in the respective sector.
• On the import of heavy passenger vehicles for collective transport of passengers comprising more than 12 seats, including driver, when imported by public transporter with the respective permit, that is in the process of replacing licensed vehicles, as foreseen in the General Legal Regime of Transport in Motor Vehicles.
• On the import of heavy passenger vehicles intended for school transport, duly equipped, comprising more than 23 seats, including driver, when imported by an educational entity duly authorised by the competent ministry, local authorities, and public transporter, provided that those vehicles are duly licensed and authorised by the competent authorities.

These imports are also subject to customs duties at the reduced rate of 5%.

The above incentives shall not apply to vehicles aged more than six years, with exception of the import of heavy passenger vehicles for collective transport of passengers when imported by public transporter.

Exemption from excise duties on the import of heavy vehicles for tourism, four-by-four vehicles, and taxis

During 2024, the import of heavy passenger vehicles, properly equipped, with more than 30 seats, including the driver’s seat, exclusively intended for the transportation of tourists and luggage is exempt from excise duties and VAT. This exemption applies when carried out by public carriers duly licensed by the Directorate General of Road Transport. This incentive does not apply to vehicles aged more than six years.

Additionally, these imports are also subject to customs duties at the reduced rate of 5%.

During 2024, the import of light passenger vehicles, in new condition, exclusively intended for the operation of taxi services is exempt from excise duties and subject to a reduced import duty rate of 5%.

Also, for 2024, the import of four-by-four (4x4) vehicles for adventure tourism is exempt from excise duties.

Incentives under the Young Start-up Program

Incentives for corporate finance

Resident or non-resident entities with PE in Cabo Verde that make:

• cash capital contributions to companies eligible under the Young Start-up Program, or to
• companies based in a municipal territory with average of GDP per capita in the last three years below the national average, as well as to
• micro and small companies,

can deduct part of these contributions, up to 2% of tax assessed in the previous tax year, provided that:

• there are no overdue wages
• their tax and contributory situation is regularised
• they are not taxed under indirect tax methods, and
• authorisation is granted to all their bank accounts.

The deduction cap shall apply even if the company makes capital contributions in more than one eligible company.

This benefit is not cumulative with the tax benefit regarding conventional remuneration of share capital.

Other incentives

The following incentives are applicable to entities that carry out, directly and as their main activity, an economic activity eligible under the Young Start-up Program, approved by Resolution No. 34/2017 of 25 April:

• CIT rate of 5%, applicable in the first five years of activity, starting 1 January 2019, except in the case of ICT and R&D activities, whose rate is 2.5%, regardless of the location of the head office or place of effective management.
• Exemption from customs duties, excise duty, and VAT on the import of one vehicle for the transport of goods, comprising up to three seats in the cabin, including driver, with a maximum age of five years, intended exclusively for the respective activity.
• Exemption from import duties on the import of raw and subsidiary materials, materials, and finished and semi-finished products intended for incorporation into products manufactured within the scope of industrial projects; the incentive shall apply provided that the entities are certified and registered at the Industrial Registry, during the installation, expansion, or remodelling phase.
• Financial incentives, support for capacity-building, and other institutional support provided for in legislation of micro and small companies.
• Exemption from stamp duty on financing agreements for the development of the respective activities.
• Reduction of 50% of the fees due on notarial acts and registrations due on the purchase and sale of real estate for the respective installation.

Eligible companies whose place of effective management is located outside the municipalities of Praia, São Vicente, Sal, and Boa Vista shall benefit from a tax credit of 50% of the CIT assessed (not applicable to ICT and R&D activities).

Eligible companies shall benefit from the incentives provided for in article 13 (exemption from property tax), article 15 (exemption from customs duties), and article 332 (training, internships, and scholarships) of the Tax Benefits Code, as well as of the incentives foreseen for employers hiring young people.

Eligible companies benefiting shall be subject to the payment of autonomous taxation under the general terms foreseen in the CIT Code.

Incentives to electric mobility

There is an exemption from VAT, customs duties, and excise duties on the import of electric vehicles, including two-wheeler vehicles.

The exemption from VAT and customs duties also applies to the import of new rechargeable batteries for electric vehicles, including their connectors, shields, connecting cables, and meters, intended exclusively for charging.

Parking fees of the referred electric vehicles are also exempt from VAT.

Incentives for the industrial production of inerts

During 2024, the import of machines, equipment, and their accessories and separate parts for the industrial production of inerts, as well as all types of materials intended for the industrial production of inerts, are exempt from customs duties and VAT, including extraction of minerals, applicable to projects located in the islands of Brava, Fogo, Maio, São Nicolau, and Santo Antão.

Incentives for the production of renewable energy

The import of equipment and their accessories, in a new and modern state, for the production of renewable energy, namely solar panels, wind generators, and other devices of production of renewable energy, is exempt from customs duties.

Incentives for waste recycling and the promotion of alternative products to single-use plastic objects

Exemptions from customs duties and VAT are granted to the following:

• Alternative products to single-use plastic products, as detailed in the relevant Decree from the members of the government responsible for environment and trade.
• Machines, equipment, and their accessories and separate parts, as well as all types of material intended for recycling waste and the production and marketing of alternative single-use plastic products in the national territory, within the scope of incentives for private investments.

Exemption from payment of fees due for fishing licences of small-scale fishing boats up to five tons

An exemption is granted from payment of fees in obtaining fishing licences for boats up to five tons registered in the National Vessel Registration System and whose holder has more than one boat.

Additional tax deduction of expenses with certification or accreditation

There is an additional CIT deduction (of 30%) of costs with certification or accreditation of quality management systems, products, processes, and services made at home or abroad. The competent authority (Instituto de Gestão da Qualidade e da Propriedade or IGQPI) must have previously authorised the certification or accreditation.

Tax benefits to the financial sector

The Tax Benefit Code has several measures in the financial sector, as follows.

Financial investments

Income derived from certificates of deposit and long-term bank deposits benefit from a CIT exemption of up to 75% (depending on the maturity date of the deposits).

Securities market (bonds)

Income derived from bonds or similar products (except public debt securities) listed in the securities market obtained until 31 December 2025 benefit from a 5% CIT flat rate.

Additionally, dividends from shares listed in the stock exchange, placed at the disposal of its holders until 31 December 2025, are exempt from CIT.

Investment funds (securities and real estate funds)

Income derived from securities funds, when established and operating under the Cabo Verdean legislation, is taxed as follows:

• Income obtained in the Cabo Verdean territory is exempt from CIT (except capital gains).
• Foreign income is subject to a 10% CIT flat rate (except capital gains).
• Capital gains are subject to a 10% CIT rate.

Income derived from real estate funds, established under the Cabo Verdean legislation, is taxed as follows:

• Real estate income benefits from a 10% CIT rate (after deduction of the respective expenses).
• Capital gains benefit from a 15% CIT rate over 50% of the income, resulting in an effective rate of 7.5%.

Income received by unit holders in securities funds and real estate investment funds, established under Cabo Verdean legislation, is exempt from CIT.

Venture capital funds

Income derived from venture capital funds, established under Cabo Verdean legislation, as well as income received by the unit holders in venture capital funds, is exempt from CIT.

Credit institutions with restricted authorisation

Credit institutions with restricted authorisation (Instituições de crédito de autorização restrita or ICAR) licensed until 31 December 2018 benefit from:

• Customs duties exemption on the importation of materials and equipment that are exclusively applied in the establishment of the entity.
• Reduced CIT rate of 10% applicable until 31 December 2021 (not applicable on profits derived from transactions with residents); profits realised from 1 January 2022 onwards shall be taxed at the standard rate in force.

The general Cabo Verde tax regime applies to new ICAR licensed from 1 January 2019 onwards.

The legal regime applicable to credit institutions with restricted authorisation was revoked, effective 24 March 2020 onwards.

A transitional regime is foreseen, establishing that, until 30 December 2020, existing ICAR can amend their articles of association and internal organisation, as necessary, in order to operate as a generic authorisation financial institution.

Customers of credit institutions with restricted authorisation

The following exemptions are foreseen applicable to contracts signed until 31 December 2018:

• Exemption from PIT until 2021 on income earned by customers of those institutions, namely non-resident natural and legal persons, or resident natural and legal persons in respect of investments held abroad.
• Exemption from stamp duty on all acts and operations carried out by those institutions, whenever the taxable person is a natural and legal non-resident person, or a resident natural and legal person, in respect of investments held abroad.

Loans from non-resident financial institutions

Interest from loans granted by non-resident financial institutions to resident credit institutions is exempt from CIT, provided that such interest is not attributable to the PE of those institutions located in Cabo Verdean territory.

Long-term financial investments

Income from certificates of deposit and long term deposits for a period exceeding five years are taxed at 50% of the value for terms between five and eight years (previously between five and ten years) and 25% of their value for terms of maturity over eight years (previously ten years); these benefits are extended to income from insurance products from insurance companies established in Cabo Verde, provided that it has been contractually fixed that (i) the capital invested is blocked for a minimum period of five years and (ii) the remuneration is due at the end of the contractual period.

Capital gains on sale of shares

Capital gains and capital losses on the sale of share capital or other securities, obtained by residents and non-residents with a PE in Cabo Verde, are exempt from tax if the shares have been held for a consecutive period of at least 12 months. This benefit does not apply to capital gains on the sale of share capital acquired from entities that are subject to a more favourable tax regime. This exemption does not apply on the transfer of shareholdings in a company in which more than 50% of the assets owned are composed, directly or indirectly, of real estate located in Cabo Verde (it includes the gains derived from the respective transfer for a consideration).

Securities market

An exemption from income tax is granted for securities issued up to 2020 and negotiated in the secondary market.

Incentive to the Capitalisation of Companies (Incentivo à Capitalização das Empresas or ICE)

An amount corresponding to the application of the rate of 10% of the net increase in eligible equity can be deducted against the taxable profit, capped at CVE 20 million.

The part that exceeds the cap can be carried forward for a period of five years.

The amount of net increases in eligible equity corresponds to the sum of the amounts assessed in the tax year concerned and in each of the nine previous tax periods. In case the net increase in eligible equity is negative, the result is zero.

The following are eligible equity increases:

• Cash contributions made in connection with the incorporation of companies or the increase in the share capital of the beneficiary company.
• Contributions in kind made within the scope of the share capital increase that correspond to the conversion of credits into capital.
• Premiums for issuance of securities.
• Net accounting profits of the tax period concerned that are applied to retained earnings or, directly, to reserves or to an increase in share capital.

The net increases in eligible equity correspond to the increases in eligible equity after deducting outflows, in cash or in kind, in benefit of the holders of equity, by way of remuneration or reduction of equity or equity sharing, as well as distributions of reserves or retained earnings.

Tax benefits with social nature and customs duties benefits

Incentives for employers hiring young people

Individuals and legal persons under the organised accounting regime that hire workers not older than 37 years for a first job are exempt from contributions due by the employer to social security.

This benefit shall only apply to contracts with a duration of one year or more, which relate to workers registered in the social security system and provided that no reduction or elimination of jobs has occurred, and assuming that the employer has paid the contributions due by the employee to social security.

Training, internships, and grants

Companies taxed under the verification method may deduct 150% of the following costs:

• Costs related to the training of employees.
• Costs associated with the hiring of young people for internship positions.
• Costs associated with scholarships granted to students.

Direct incentive to professional internships

Individuals and legal persons under the organised accounting regime may deduct from tax due the amount of CVE 20,000 for each trainee hired with contract duration of at least six months.

Donations

Companies may deduct 130% of the amounts donated to the following entities and activities, up to 1% of the turnover, under certain conditions:

• Entities that develop, among others, social, cultural, sportive, educational, environmental, scientific, technological work, and health services.
• State, municipalities, and any other public services.
• Municipal associations.
• Foundations.

Customs duties benefits

Under certain conditions, the following business sectors, among others, may benefit from customs duties exemption on the importation of products, materials, and equipment related to the activity/project:

• Agriculture, livestock, and fishing activity.
• Civil aeronautics.
• Diplomatic and consular missions.
• Aid to economic development.
• Foreign citizen retired.
• Sports and musicals.
• Fire corporation.

Tax benefits to other sectors of investment

Eligible investments made in activities such as information technology and scientific research may benefit from:

• CIT credit of up to 20%.
• Exemptions from IUP, stamp duty, and customs duties on the acquisition of immovable property and other assets related to the investment project or its financing.

Tax benefits regarding the Recovery of Business and Insolvency Code

There are CIT, PIT, stamp duty, and property tax benefits for companies under recovery of business and insolvency procedures.

Foreign tax credit

Cabo Verdean tax law allows a foreign tax credit to mitigate the double taxation on foreign income taxed in another jurisdiction. The tax credit is equal to the lesser of: (i) the income tax paid abroad or (ii) the CIT fraction calculated before the deduction is given corresponding to incomes that may be taxed in the country concerned, net from any cost or losses, directly or indirectly incurred, for the purposes of its realisation. Foreign tax credit cannot exceed the tax foreseen in the tax treaty, if applicable.