Cabo Verde – 2026 State Budget Law proposal
17/10/25
In brief
The 2026 State Budget Law Proposal was submitted to the Parliament on 1 October
The main tax measures set out in the document are highlighted below.
I - New tax measures
Pillar Two - Qualified global minimum tax
The Government proposes to introduce a qualified global minimum tax (GMT) under the international BEPS Pillar Two initiative.
The GMT would apply to multinational groups or large domestic groups with annual revenues of at least € 750,000,000.
The GMT rate will be 15%, calculated by the effective tax rate (ETR) and in accordance with specific rules, in respect of constituent entities located in Cabo Verde that belong to in-scope groups.
The concepts, operation, and the rules and procedures for assessment and collection will be set out in standalone legislation and regulations.
Exemption from withholding tax - Promotion of the public inter-island air transport service
The Government proposes to exempt from withholding tax rental payments to non-resident entities under aircraft operating or finance lease agreements, provided that:
a) the aircraft are used exclusively for the operation of the public inter-island air transport service;
b) the operator is duly licensed by the Civil Aviation Agency of Cabo Verde (AAC); and
c) the lease agreements and the corresponding operator certificates are filed with the Tax Authority.
Exemption from taxation - Fishing vessel chartering regime
It is proposed to exempt from Personal Income Tax (PIT) the income paid to non-resident employees and service providers for work performed on board fishing vessels duly registered in Cabo Verde.
It is also proposed to exempt from all taxation the income paid to non-resident entities in Cabo Verde arising from service provision and chartering agreements, including supplies, rentals, leases, and fishing licenses.
VAT exemptions
The VAT exemption will cease to apply to certain goods listed in items 1, 4 and 5 of the List annexed to the VAT Code.
The use of software certified by the Tax Authority will become mandatory for maintaining accounting records and issuing electronic invoices and other electronically issued tax-relevant documents.
Invoicing obligations
- Mandatory issuance of invoices and tax-relevant documents by electronic means, irrespective of whether a specific statute provides for such issuance.
- Mandatory inclusion of a QR Code and a Unique Document Identifier on invoices and tax-relevant documents.
- Additional statements to be included on invoices issued by duty-free shops.
- The Tax Authority will be granted supervisory powers over the issuance of invoices and tax-relevant documents by electronic means.
New tax incentives
- Incentives for the import of vehicles by driving schools.
- Incentives to promote the use of non-motorized bicycles.
Import tax benefits
Change to the procedure for recognizing import benefits, requiring applicants to submit electronically, directly to the customs authority, requests for customs clearance of goods to be imported under projects approved pursuant to the Tax Benefits Code, no more than 60 days prior to the goods’s arrival in the country.
Excise Tax
- The specific rate on tobacco will be updated to CVE 180 per pack of cigarettes.
- The ad valorem component for beer, wine and spirits produced locally will be removed, and specific rates will be set at CVE 20 per litre for beer, CVE 30 per litre for wine and CVE 100 per litre for spirits.
II – Maintenance of Carbon Tax
The carbon tax introduced by the 2025 State Budget will continue to apply in 2026.
III - Maintenance of tax Incentives and benefits in 2026
The following tax incentives and benefits are proposed to be maintained in 2026:
- R&D for companies;
- Young Start-up (“Start-up Jovem”);
- Reinvestment of profits;
- Corporate financing;
- Enhanced deductions for certification, accreditation, and calibration costs; and for the acquisition of accounting and invoicing equipment and software;
- Incentives for hiring and professional internships;
- Emigrants;
- Exemption for imports by municipalities;
- Performance of professional activity remotely from outside the national territory;
- Incentives for the import of taxis;
- Incentives for the import of passenger transport vehicles;
- Import of heavy transport vehicles for tourists;
- Import of off-road vehicles for adventure tourism;
- Electric mobility;
- Import of equipment for quality certification;
- Incentives for the construction of sports facilities;
- Fiscal and administrative measures for the implementation of the international submarine fibre-optic cable project;
- Exemption from fees for fishing licenses for artisanal fishing vessels of up to 5 tons;
- Customs incentives relating to the digital terrestrial television implementation project;
- Incentives for distance learning;
- Renewable energy Production and micro-generation;
- Incentives for water desalination and renewable energy production for irrigated agriculture;
- Incentives for the import of animals, animal feed, medicines, irrigation materials, greenhouses, food-transport equipment, and agricultural implements;
- Recycling and promotion of alternative products to single-use plastic items;
- Industrial production of aggregates;
- Incentive for fish-canning activities;
- Tax relief measures for electricity and water consumption.
IV – Other tax measures
Exemptions and reduction of tax rates - Promoting access to housing
The Government proposes to adopt measures to promote housing, namely:
- Promoting the construction and sale of housing at controlled prices by granting tax incentives similar to those currently in force for investment projects, including investment tax credits, exemption from property tax, exemption from stamp tax, and a reduced import duty rate;
- Facilitating individuals’ access to housing through the exemption from notarial and registration fees , exemption from stamp tax on financing, exemption from property taxes on the acquisition and ownership of property, and an increase in the cap for deducting rent and housing-finance expenses for Personal Income Tax (PIT) purposes.
Greenhouse gas emissions system
Provision is made for the establishment, in 2026, of the Cabo Verde greenhouse gas emissions system.
© 2024 PwC. This communication is of an informative nature and intended for general purposes only. It does not address any particular person or entity nor does it relate to any specific situation or circumstance. PricewaterhouseCoopers Tax Services TLS, Lda. We will not accept any responsibility arising from reliance on information hereby transmitted, which is not intended to be a substitute for specific professional business advice.
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