Cabo Verde – 2024 State Budget Law proposal approved


In brief

The 2024 State Budget Law proposal (SB 2024) was approved on 24 November. We highlight the reduction in the CIT rate, among other tax measures, aiming at promoting investment and employment.

In detail

General CIT rate 

It is proposed to reduce the CIT rate to 21% (currently 22%). 

Deduction of tax losses

It is proposed to eliminate the seven-year limit for the deduction of tax losses. 

Special tax regime for group companies 

It is proposed to introduce a regime under which the taxable profit of a group is calculated by summing up the profits and tax losses determined individually by each of the companies belonging to the group.

The concept of “invoices issued in legal form” that confer the right to deduct the input VAT has been updated to include the invoices issued electronically. 

Additionally, the self-billing regime is introduced, with the possibility for the acquirer of the goods and services to issue the invoices in the name and on behalf of the supplier. In this context, the conditions that must be met when self-issuing the invoices are also foreseen.

a) New incentives 

Exemption from Customs Duties and VAT 

Incentives for the industrial production of inerts

It is proposed to introduce an exemption from Import Duties (ID) and Value Added Tax (VAT)  on the import of machines, equipment and their accessories and separate parts, as well as all types of materials intended for the industrial production of inerts, including extraction of minerals, applicable to projects located in the islands of Brava, Fogo, Maio, São Nicolau and Santo Antão. 

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

It is proposed to exempt from ID and VAT the import of:

  • Alternative products to single-use plastic products, as detailed in the relevant Decree.
  • 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.

b) Changes to existing regimes

Tax credit for investment

It is proposed to harmonize the percentage of the tax credit available. The percentage shall correspond to 20% of the value of the investments made, regardless of the area of activity (currently, 30% for certain areas of activity and 20% for the remaining areas).

Contractual tax benefits

Within the scope of contractual benefits, it is proposed to extend the CIT exemption beyond five years, subject to compliance with certain conditions.

Incentive for company capitalization 

Amendments are proposed to the regime. An amount corresponding to 10% of the increases in eligible equity shall be deducted for the purposes of the computation of the taxable profit, capped at CVE 20,000,000 – approx. EUR 180,000 EUR (currently, CVE 100,000,000 – approx. EUR 900,000).

For the purposes of the benefit, an increase in eligible equity is considered: 

i.contributions made in cash as part of the incorporation of the company or the increase of share capital;

ii. contributions in kind through the conversion of credit into capital.

iii. share issuance premiums.

iv. application of accounting profits that can be distributed in retained earnings, or directly in reserves or in capital increases.

c) Tax Incentives maintained in 2024

It is proposed to maintain the following tax incentives: 

  • R&D tax incentives for companies.
  • Incentives to professional activities carried out remotely outside the national territory.
  • Incentives for the production of renewable energy. 
  • Incentives to electric mobility.

In terms of transfer pricing, the proposed changes seek to emphasize the need for taxpayers to support their linked transactions and ensure that they have economic substance, otherwise the terms and conditions agreed in linked transactions may be subject to adjustment. These changes are in line with the latest international transfer pricing guidelines.

It is proposed to increase to CVE 120 (currently, CVE 90) the specific rate on tobacco due on the import or national production of each cigarette package.

It is proposed to increase specific ICE taxes on alcoholic beverages.

2023 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.

Contact us

Rosa Areias

Rosa Areias

Tax Lead Partner | Entrepreneurial & Private Business Leader | Member of the Executive Committee, PwC Portugal

Tel: Tel: +351 225 433 101

Catarina Gonçalves

Catarina Gonçalves

Partner, PwC Portugal

Tel: +351 213 599 618

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