Verified Facts
Cabo Verde has a tax system that is generally considered to be territorial, meaning that individuals and businesses are only taxed on income earned within the country, although there are some exceptions for worldwide taxation for residents, with tax rates ranging from 5% to 28% for personal income tax and a corporate tax rate of 22%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Cabo Verde's tax system is based on the principle of territorial taxation, where individuals and businesses are taxed only on income earned within the country. However, residents are subject to worldwide taxation, meaning they are taxed on their global income, regardless of where it is earned. The tax year in Cabo Verde runs from January to December, and taxpayers are required to file their tax returns by the end of March of the following year. To be considered a tax resident in Cabo Verde, an individual must have a permanent home in the country, or spend more than 183 days in the country in a calendar year.
The tax system in Cabo Verde is administered by the National Directorate of Taxes, which is responsible for collecting taxes, enforcing tax laws, and providing tax advice to taxpayers. The country has a relatively simple tax system, with a limited number of tax rates and exemptions. However, the tax system can be complex for foreign investors and expatriates, who may be subject to different tax rules and regulations. It is therefore essential to consult a qualified tax professional to ensure compliance with all tax laws and regulations.
Personal Income Tax
| Income Bracket (CVE) | Tax Rate |
|---|---|
| 0 - 300,000 | 5% |
| 300,001 - 600,000 | 10% |
| 600,001 - 900,000 | 15% |
| 900,001 - 1,200,000 | 20% |
| 1,200,001 and above | 28% |
| Taxpayers in Cabo Verde are entitled to various deductions and allowances, including a personal allowance of CVE 60,000, and deductions for mortgage interest, charitable donations, and education expenses. Tax returns must be filed electronically, and taxpayers are required to pay any tax due by the end of March of the following year. Failure to file a tax return or pay tax on time can result in penalties and interest charges. |
Corporate & Business Tax
- The corporate tax rate in Cabo Verde is 22%, which applies to all companies, including foreign companies with a permanent establishment in the country.
- Small businesses with an annual turnover of less than CVE 1 million are eligible for a reduced tax rate of 15%.
- Cabo Verde has several free zones, including the São Vicente Free Zone, which offer tax exemptions and other incentives to businesses that operate within these zones.
- Companies are required to register with the National Directorate of Taxes and obtain a tax identification number before commencing business operations.
- Companies are also required to file an annual tax return, which must include a balance sheet, profit and loss account, and other supporting documentation.
VAT / Sales Tax
- The standard VAT rate in Cabo Verde is 15%, which applies to most goods and services.
- A reduced VAT rate of 10% applies to certain essential goods, such as food, medicine, and education services.
- Some goods and services are exempt from VAT, including financial services, insurance, and healthcare services.
- Tourists are eligible for a VAT refund on certain goods, such as clothing, electronics, and souvenirs, provided they spend more than CVE 10,000 in a single transaction.
For Expats & Foreign Workers
- Foreign workers are considered tax residents in Cabo Verde if they spend more than 183 days in the country in a calendar year.
- Cabo Verde has double taxation treaties with 17 countries, including Portugal, China, and the United Kingdom, which can help to reduce tax liabilities for foreign workers.
- Foreign workers are required to register with the National Directorate of Taxes and obtain a tax identification number before commencing work in the country.
- Foreign workers are entitled to social security benefits, including healthcare, pension, and unemployment benefits, provided they contribute to the social security system.
- Remittances to foreign countries are subject to a withholding tax of 10%, which can be reduced or eliminated under certain circumstances.
- Foreign workers may be eligible for a tax exemption on foreign-earned income, provided they meet certain conditions, such as spending less than 183 days in the country in a calendar year.
Crypto & Investment Income
- Investment income, including dividends, interest, and capital gains, is subject to income tax in Cabo Verde, at a rate of 10% or 20%, depending on the type of investment.
- Cryptocurrency is considered a financial asset in Cabo Verde, and is subject to capital gains tax, at a rate of 10%.
- Dividends paid by Cabo Verde companies are subject to a withholding tax of 10%, which can be reduced or eliminated under certain circumstances.
- Foreign investment income is subject to tax withholding in the country of source, which can be reduced or eliminated under certain circumstances, such as under a double taxation treaty.