Cabo Verdean law is based on the civil law system. The Constitution of Cabo Verde and relevant legislation provide for a judiciary independent from the executive. The judicial system in Cabo Verde is based on three levels of appreciation by different courts:

• First Instance Courts (trial court);
• Courts of Appeal; and
• the Supreme Court.

As a rule, any case shall be presented at the First Instance Courts and, depending on several factors (such as the value of the case or the subject matter), the party that loses the case may appeal to the Court of Appeal, and subsequently (as a second level of appeal) to the Supreme Court, which only analyses questions of law.

There are no restrictions on the entry of foreign investments. All investors have the same rights, regardless of their nationality, and are subject to the same duties and obligations under the laws of Cabo Verde. A national partner is not required, and there are no limitations on the distribution of profits or dividends abroad.

The rules governing foreign investment are similar to those applicable to domestic investment. No special registration or notification to any authority regarding foreign investment is required. However, there may be mandatory registration/approvals for specific activities – such as in the banking, finance, aviation, maritime and telecommunications sectors – that are applicable for both foreign and domestic investment.

There are no restrictions on the entry of foreign investments, and the rules governing foreign investment are similar to those applicable to domestic investment.

See 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance.

The law recognises the right of an investor to challenge any decision of the administrative authorities in court. The scope of the legal challenge depends on the nature of the decision by the administrative authority.

As a rule, the First Instance Court has a mandatory deadline of three years to issue a decision.

The following types of company are the most relevant provided for in the Cabo Verde Companies Code, and are frequently chosen by foreign investors aiming to start their own enterprise structure in Cabo Verde. The choice of one of these structures depends on many factors, such as:

• the type of business to be implemented;
• the simplicity or size of the operations;
• the amount of capital to be invested;
• the possibility to transfer ownership freely; and
• disclosure rules about the aforesaid ownership.

The most commonly used forms are public limited companies and limited companies, since they are more operational.

Public Limited Companies (Sociedade Anónima)

A public limited company (sociedade anónima, or SA) is the form traditionally adopted by larger companies. It is primarily characterised by the fact that it has a more complex organisational structure than, for example, the limited company. The public limited company form also provides greater flexibility when it comes to share capital insofar as no special procedure is required for the transfer of shares.

This type of company has the following characteristics.

• Minimum share capital of EUR0.01.
• A minimum of two shareholders. A single-shareholder public limited company incorporation is permitted if the single shareholder is another company.
• As a general rule, public limited companies are incorporated by means of a private document (articles of association). Additional formalities may apply if the shareholders perform contributions in kind.
• As a rule, the transfer of shares is free and may be carried out by means of an agreement between the parties.
• The governing bodies of a public limited company are as follows.
1. A management board, generally with a minimum of three members. Management can be entrusted to one director if the turnover for two consecutive years is expected to be less than CVE10 million. In addition to the election of the effective members of the board of directors, substitute directors must be elected in numbers not exceeding one third of the effective directors – this means three effective members and one substitute member, or one effective member and one substitute.
2. A shareholder meeting.
3. A supervisory board (three members) or one auditor – a member of the supervisory board or the auditor must be certified.
4. An auditor (for large companies).
• Shareholders’ liability is limited to capital subscribed, but shareholders are jointly and severally liable for all contributions contained in the by-laws.
• Flexibility of capital – only registered shares are allowed, which are transferred by endorsing the share certificate in the name of the transferee. Notice must be given to the company for the purposes of registration in the share book. Book-entry shares are transferred by registration in the transferee’s bank account. The only limit on the free transfer of shares may arise from any pre-emption rights that have been established by the shareholders in the articles of association.

Limited Companies (Sociedade por Quotas)

This type of company has the following characteristics.

• A minimum share capital of EUR0.01.
• A minimum of two shareholders as a rule, although single-shareholder limited liability company incorporation is permitted.
• As a general rule, limited companies are incorporated by means of a private document (articles of association). Additional formalities may apply if the shareholders perform contributions in kind.
• The transfer of shares may be carried out by means of an agreement between the parties, except when the incorporation has been made through public deed.
• The company is governed by management, with one or more directors. An auditor is not mandatory, but companies that do not have a supervisory body must appoint a certified auditor to carry out the statutory audit if their turnover is greater than CVE10 million and/or the number of employees is more than ten.
• Shareholders’ liability is limited to capital subscribed, but shareholders are jointly and severally liable for all contributions contained in the by-laws.
• The transfer of shares must be made by written agreement between the parties. The articles of association may set limits or conditions on the transfer of shares or pre-emptive rights in favour of other shareholders or the company itself.

The procedural steps to set up a company are as follows.

• Approval of name – the first step in this type of process is to gain approval for the name of the company to be set up, and to indicate what type of company it will be.
• Head office of the company – the company must indicate the location where it will carry out its commercial activity.
• Corporate structure – the identification documents or commercial certificates, according to whether individuals or legal entities are involved, of the shareholders or quota-holders who will make up the corporate structure of the company are required. If the individuals or legal entities are foreign, the above documents must be legalised at the Cabo Verdean consulate in the country of origin, or apostilled. If the shareholders or quota-holders are legal entities, it will also be necessary for the written resolution approving the setting up of the Cabo Verdean company and the shareholding to be held by the legal entity in question.
• Powers of attorney – if the share/quota-holders are not available to travel to Cabo Verde to sign the documentation necessary for the process of incorporating the company, they will have to execute powers of attorney granting powers to representatives in Cabo Verde to deal with the respective legal steps of incorporation.
• The articles of association – this document establishes the rules that will govern the operation of the company.
• Composition of the corporate bodies – the members who will form the first board of directors must be indicated at the moment of incorporation.
• Commercial licence – after dealing with the deed of incorporation and respective commercial registration, an application must be made requesting the issue of the commercial licence.
• Commercial representation – foreign branches of commercial companies may choose to be represented in Cabo Verde through branches, agencies, delegations or other forms of representation. Representations are authorised to carry out activity in Cabo Verde in accordance with the applicable time limit.

The ongoing reporting and disclosure obligations depend on the company’s sector of activity. Companies that operate in finance, banking, insurance and communications are subject to different levels of ongoing reporting and disclosure obligations.

Companies that are not subject to special legal regimes must report the following:

• annual accounts, which are to be filed annually with the commercial registry and must be publicly available;
• a statement of commencement of activity from the tax authorities;
• a statement of commencement of activity for social security purposes; and
• any amendment to the articles of incorporation.

For a sociedade anónima, the management must be structured as a board of directors, with a minimum of three members or an executive board of directors. Where the share capital does not exceed EUR90,691, the board of directors can be replaced by a single director.‬‬

For sociedades por quotas, management is discharged by one or more managers, who must be individuals, designated by the shareholders.

Directors can face civil and criminal liability.

Directors’ Civil Liability

Members of the board of directors can be held liable towards the company for damages caused by acts or omissions resulting from disrespect of their legal or contractual duties, unless the directors can prove that they did not act wilfully or maliciously.

As an expression of the business judgement rule, liability is waived if directors can prove that they acted in an informed manner, free of any personal interest and using the criterion of corporate rationality. A director who does not exercise the right of opposition conferred by law, when able to do so, will be jointly liable for the acts they could have objected to.

Directors are not liable towards the company if the act or omission is part of a resolution of the general meeting, even if that resolution is voidable. However, directors will not be released from liability on the favourable opinion or consent of the supervisory body.

Directors’ Criminal Liability

Under Cabo Verdean law, only crimes expressly provided for in the law can be punishable. Companies and individuals can be held criminally liable.

Directors can be liable for any action wilfully performed on behalf of the company whenever such action qualifies as a crime, and even if the relevant type of crime requires (to qualify as such) certain elements that can only occur in the company or if an agent acts in its own interest and the director acted in the company’s interest.

Misdemeanour Proceedings

Certain actions of the directors can qualify as misdemeanours and incur fines and accessory penalties applicable to the relevant agent (either a company or generally a director acting on behalf of the company).

The employment relationship is regulated by the Labour Code (Legislative Decree No 5/2007 of 16 October). Several other laws regulate important issues, such as work-related accidents and sickness.

Nevertheless, the parties may agree some special situation conditions for the employment relationship in employment agreements, provided such conditions do not violate the Labour Code. It is also possible to have collective bargaining agreements with more favourable conditions for employees.

Civil servants or public employment relationships are subject to special regulation.

As a rule, no written document is required and the employment relationship can be proved by any means.

Some types of contract must be in writing – ie, fixed-term or part-time and certain top management contracts. The contract not being in writing does not render it invalid, but it can lead to the contract being requalified as a full-time, permanent contract.

The minimum and maximum working times are regulated by the Labour Code. The normal working period may not exceed eight hours per day and 44 hours per week, and a minimum of 12 consecutive hours of rest must be respected.

The Labour Code provides that, by a unilateral decision of the employer, a single schedule of seven hours of daily work may be established during the months of July to September, between 6am and 3pm on the same day. During daylight saving time, the employee shall be allowed an interval of not less than 15 minutes. The employer may also choose to maintain normal working hours by extending rest time between the morning and afternoon periods, but in such case the afternoon period may not pass 7.30pm each day. As a rule, the daily working period shall be interrupted by an interval with a maximum duration of one hour so that the employee does not work more than five consecutive hours.

Overtime hours are also regulated by the Labour Code. Such hours are considered to be work outside the normal period of work to which the employee is bound, and can only be done in the following circumstances:

• in the case of an increase in work that does not justify the recruitment of other employees;
• in the case of force majeure; or
• if there are serious reasons that make it necessary in order to prevent serious harm.

The employment contract is extinguished by:

• mutual agreement of the parties;
• expiry;
• collective dismissal;
• individual dismissal for just cause; or
• termination by the employee.

Mutual Agreement of the Parties

It is always lawful for the employer and the employee to terminate the employment contract by mutual agreement, which must be executed in writing. The parties are free to enter into an agreement with or without compensation and to fix the date of termination – ie, to establish that the termination will be immediate or in the future. However, if the parties intend to give immediate effect to the termination agreement, the employer shall agree compensation with the employee, taking into consideration the type and duration of the employment contract, remuneration and the possibility of finding a new job. The compensation to be agreed between the parties may be paid in cash or in goods, in a single instalment or in several instalments.

The employee can always claim cancellation of the agreement or any of its clauses, by judicial proceedings, if they consider that there has been an error, malicious act or coercion in its conclusion.

Expiry

The employment contract expires as follows:

• once the period has expired;
• if there is a supervening, absolute and definitive impossibility of the employee performing the work for which they were hired;
• by the occurrence of any extinctive facts, not dependent on the will of the parties; or
• upon the retirement of the employee.

The expiry of the contract due to the expiry of the initial or renewal period gives the employee the right to compensation of the following amounts:

• 21 days of basic remuneration if the contract lasts one year;
• 15 days of basic remuneration for each full year of the contract, in addition to the first year; and
• 1.75 days of basic remuneration for each month of the contract term up to one year.

In undetermined-duration and fixed-term contracts with a duration of more than five years, the employee is entitled to compensation in the amount of ten days of basic remuneration for each full year after the first five years and one day of compensation for each month of duration of the contract up to one year.

Collective Dismissal

The employer may terminate the employment contracts of two or more employees on the grounds of reduced business or permanent closure of the company, establishment or part of the company structure for economic, conjectural or technological reasons.

The employer intending to make a collective dismissal shall communicate its intention in writing to the unions representing the employees. If the employees are non-unionised, the company shall notify the employees directly. The communication shall include the following information:

• the grounds for collective dismissal;
• the expected date for the termination of the contracts;
• the criterion for the selection of employees; and
• the number and professional category of the employees covered by the collective dismissal.

The employees covered by the collective dismissal are entitled to compensation, the amount of which depends on the date the employee was hired.

Individual Dismissal for Just Cause

Under certain circumstances, the employer can terminate the contract for just cause. The concept of just cause includes disciplinary dismissal and other forms of dismissal, provided that they are justified according to the law.

For dismissal based on unlawful conduct of the employee, the concept of just cause is the centrepiece of the matter and consists of the impossibility in practice of continuing the employment relationship due to the seriousness of the employee’s misconduct. When dismissed with disciplinary cause, the employee is not entitled to any compensation.

If the dismissal is not justified according to the law or if the employer does not comply with the proper proceeding, the termination of the contract can be considered null and void. The contract remains in force, which can lead to reinstatement or compensation.

Termination by the Employee

The employee may terminate the employment contract at any time without any reason or explanation, but is obliged to give prior notice to the employer, which varies between 15 days and two months depending on the duration of the contract.

The right to form an employee representative body in any company, regardless of its size, is guaranteed by the Cabo Verdean Constitution. The initiative depends completely on the employees, which means that employers are under no obligation to implement this form of representation.

Employees are subject to personal income tax (PIT) under two tax methods:

• the declarative (self-assessment) method; and
• the final withholding method.

Employees are taxed according to category A (employment income), based on their residence or non-residence status. For PIT purposes, an employee is deemed resident in Cabo Verde if they:

• spend more than 183 days in aggregate in Cabo Verde during a calendar year; or
• stay fewer than 183 days therein and maintain a residence said to be the habitual residence in Cabo Verde with reference to December 31st of a given year.

Declarative Method

Under the declarative method, individuals are taxed according to their annual income statement. This method is mandatorily applicable to taxpayers taxed under category B (business and professional income) with standard organised accounting, and to taxpayers taxed under category C (rental income). This method is also applicable to dependent workers (category A) who opt to file their tax return on income obtained abroad by resident taxpayers, and on income obtained in Cabo Verde by non-resident taxpayers that could not be taxed at flat rates.

Income will be subject to taxation at rates ranging between 16.5% and 27.5%, as follows:

• up to CVE960,000 – 16.5%;
• CVE960,000 to CVE1.8 million – 23.1%; and
• over CVE1.8 million – 27.5%.

An exemption from taxation applies to net income of up to CVE220,000 annually.

Final Withholding Method

The final withholding method is used to collect taxes when taxpayers are not obliged to submit their annual income statement in the following cases.

Category A – employment and pensions

This income is generally subject to monthly withholding tax (WHT). Employment income is specifically defined in the PIT Code and covers all payments in connection with work (employment contract), such as salary, bonuses, commissions, pensions, allowances (eg, cost-of-living and housing allowances) and benefits in kind (eg, company cars), regardless of where the payment originates. Board members’ remuneration is taxed as employment income.

The following types of income are exempt from PIT:

• per diems for national and international trips, for the portion that does not exceed the limits set for the public services;
• lunch allowance, up to CVE250 per day;
• the use of a personal car, up to CVE120,000 per year;
• a cash shortage allowance, of up to 15% of the monthly salary;
• a family allowance, of up to CVE500 per month, for each dependant or equivalent and ancestors; and
• redundancy payments, which are taxable on the portion that exceeds one and a half times the average remuneration paid during the last months of employment, multiplied by the number of years of employment.

As a rule, the monthly WHT is levied as final taxation, unless the taxpayer opts to file the tax return, in which case the tax withheld has the nature of an advance payment on account of the final annual income tax liability. The monthly tax withholdings due are calculated by applying the following progressive WHT rates and the corresponding deduction to the taxable income:

• up to CVE80,000 – WHT is 15% with a CVE5,500 deduction;
• CVE80,000 to CVE150,000 – WHT is 21% with a CVE10,300 deduction; and
• over CVE150,000 – WHT is 25% with a CVE16,300 deduction.

Employees and managers or directors of the company are liable to social security contributions of 8.5% on their gross remuneration. Employers are liable to social security contributions of 16% on the same gross remuneration received by employees and managers or directors of the company.

Category B – business and professional income

Business and professional income earned by individual entrepreneurs is taxed under the following regimes:

• standard organised accounting;
• Special Regime for Small and Micro-Sized Companies (SRSMC); and
• single act (ato isolado).

Business and professional income earned by individual entrepreneurs under standard organised accounting is subject to WHT at the rate of 20% as an advance payment on account of the final annual income tax liability.

Net income is computed under the rules applicable to companies, with the adjustments provided for in the PIT Code and subject to income tax at the applicable PIT rates.

Net income is computed according to the declaration-based method (método declarativo), where tax is levied on the aggregate base of the relevant income categories in the household, minus personal deductions and allowances.

Business and professional income earned by individual entrepreneurs under the SRSMC is subject to a flat rate of 4%. Under this regime, micro and small-sized companies are subject to a Single Special Tax (SST) of 4% levied on the gross amount of sales obtained in each taxable year, to be paid quarterly. SST replaces the corporate income tax (CIT), fire brigade surtax and VAT, as well as the contribution to social security due from the company.

Under the PIT Code, a single act is considered a taxable operation performed twice during the tax year.

Category C – rental income

Rental income is subject to WHT at the rate of 20% as an advance payment on account of the final annual income tax liability. To compute the net income, taxpayers may deduct maintenance and repair expenses of up to 30% of gross rental income.

Category D – investment income

In general, investment income is subject to a flat rate of 20%, although dividends and interest on bonds are subject to a flat rate of 10%.

A special tax regime contained in the Tax Benefits Code provides for the following:

• an exemption from taxation on interest on term deposits received by Cabo Verdean emigrants;
• income derived from bonds or similar products (except debt securities listed in the securities market) obtained before 31 December 2017 benefits from a 5% flat rate; and
• dividends from shares listed in the stock exchange, placed at the disposal of their holders before 31 December 2017, are exempt from PIT.

Category E – capital gains

Capital gains earned by individual taxpayers are subject to a flat rate of 1% in the case of gains on the disposal of immovable property, intellectual property or shareholdings. A flat rate of 20% applies in the case of gains on gambling, lottery participation, betting, and prizes awarded in sweepstakes or contests.

Cabo Verde’s corporate income tax (CIT), called imposto sobre o rendimento das pessoas colectivas, is levied on profits obtained within the Cabo Verdean territory and those obtained outside by resident companies (worldwide principle). Non-resident companies with a permanent establishment (PE) in Cabo Verde are also subject to CIT on Cabo Verdean-source income attributable to the PE.

Taxable profit is computed according to the local accounting rules and adjusted for tax purposes. For the purposes of determining taxable income, CIT payers can be taxed under two methods/regimes, as follows.

• A special regime for micro and small-sized companies:
1. micro-sized companies are entities that employ up to five persons, with an annual turnover (gross amount of sales and services) that does not exceed CVE5 million;
2. small-sized companies are entities that employ between six and ten persons, with an annual turnover of between CVE5 million and CVE10 million; and
3. micro and small importers import goods with a customs value that does not exceed the value of turnover on an annual basis for the purpose of qualifying under the simplified scheme for micro and small-sized companies.
• A standard organised accounting regime – the standard/normal regime under which the computation of profits follows the local accounting rules.

Resident companies are subject to a tax rate of 20%, where taxable income corresponds to the profit minus any tax benefits and any losses carried forward, as stated in the tax return. The tax rate of 20% is also applicable for PEs of non-resident companies.

Micro and small-sized companies are subject to SST of 4% levied on the gross amount of sales obtained in each taxable year, to be paid quarterly. The SST replaces the CIT, fire brigade surtax and VAT, as well as the contribution to social security attributable to the company.

Non-resident companies without a PE are subject to WHT rates applicable for each income category stipulated in the Tax Code, which range between 1% and 20%. The CIT rate is increased by a fire brigade surcharge, called taxa de incêndio, of 2% on the tax due, leading to a final tax rate of 20.40%. This surcharge is levied in the municipalities of Praia (Island of Santiago) and Mindelo (Island of São Vicente).

Permanent Establishment

Non-resident companies deemed to have a PE in Cabo Verde are also subject to tax in Cabo Verde. Under Cabo Verdean tax law, a non-resident company is deemed to have a PE if one of the following applies:

• it has any fixed installation or permanent representation located in Cabo Verde through which activities of a commercial, industrial or agricultural nature, fishing or the rendering of services, among others, are carried out (including agricultural, fishing and cattle-raising explorations);
• quarries or any other places of natural resource extraction are involved; or
• it carries out its activity in Cabo Verde through:
1. employees, or any other personnel hired for that purpose, for a period (continuous or not) of not less than 183 days within a 12-month period;
2. a person (a dependent agent) who is not an independent agent acting in the Cabo Verdean territory on behalf of a company, with powers to intermediate and conclude binding contracts for that company, within the scope of its business activity; or
3. a building site or a construction installation if it lasts for more than 183 days, as well as activities of co-ordination, supervision and inspection related to the building site or its construction installation.

A PE is also recognised in the case of:

• commissionaire arrangements;
• preparatory or ancillary activities carried out by closely related enterprises through a fixed installation; and
• independent agents acting exclusively, or almost exclusively, on behalf of one or more closely related enterprises.

A PE of a non-resident is taxed as a resident company.

Foreign Investor Status (Estatuto do Investidor Externo)

Foreign Investor Status previously granted some tax benefits at the level of the investor (eg, exemption from WHT on distribution of profits and on interest related to the financing of the investment), but was revoked by the New Investment Law effective as of 1 January 2013. Those tax benefits already granted, or for which recognition has been requested prior to the entry into force of the Tax Benefits Code 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 their respective submissions.

Contractual Tax Benefits

There are exceptional incentives – regarding customs duties, CIT, PIT, property tax and stamp duty – for investments that fulfil all of the following conditions.

• The promoter of the investment possesses technical and managerial capacities.
• The invested amount exceeds CVE3 billion (EUR27,207,183). The relevant amount is CVE1.5 billion (EUR13,603,591) for 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).
• They create, directly, at least 20 qualified jobs (ten in the 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, or 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.

Differentiated Merit Projects (DMP)

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

• represent an investment equal to or higher than CVE1.5 billion (EUR13,603,591);
• 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; and
• 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 DMP status are granted the following benefits:

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

DMP investment projects implemented in municipal areas where the GDP per capita is lower than the national average have the following additional benefits:

• CIT credit of 40% of the eligible investments effectively made (capped at 50% of the CIT assessed); and
• 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 the following tax incentives, as established by Law 73/IX/2020, of 2 March:

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

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

Investment in tangible assets or intangibles in Cabo Verde is eligible under the conditions contained in the regime – eg, the incorporation of entities or branches in Cabo Verde, the acquisition of shareholdings, or the 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 20% 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 importation of construction materials, machines, utensils, semi and fully 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 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, insurance, real estate or construction).

CIT benefits

Reduced CIT rates of 5%, 3.5% or 2.5% are applicable, respectively, to entities that create ten, 20 or 50 jobs. The CIT rate is 2.5% in the case of the creation of four jobs for entities licensed to operate within the IBC. Entities licensed to operate within the IBC will benefit from reduced CIT rates until 2030.

Shareholders’ benefits

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

VAT and customs duty benefits

All the exemptions contained in the VAT regulation and customs law apply. 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 contains 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 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; and
• 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:

• up to 1,000 net tonnes – the daily taxable income for each 100 net tonnes is CVE646;
• from 1,001 to 10,000 net tonnes – CVE566;
• from 10,001 to 25,000 net tonnes – CVE307; and
• above 25,000 net tonnes – CVE103.

No tax credits are available.

If there is a change from the tonnage tax regime to the general CIT regime, the tax value of the assets held corresponds to the value resulting from the application of the general rules contained in the CIT Code, as if the taxpayer had not applied the special regime. In addition, tax losses or any tax credits carried forward that originated during the taxable periods to which the special regime applied are disregarded.

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 undertaken before 31 December 2020 by companies whose head office and place of effective management are in Cabo Verde.

CIT benefits

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

• a reduction in their CIT rate of up to 50%, applicable until the term of the investment contract; and
• an exemption from CIT on income obtained by qualified expatriate employees.

In addition, a deduction for the creation of employment ranging between CVE26,000 and CVE35,000 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.

VAT and customs duty benefits

Exemptions provided for in the VAT Code apply, as well as customs duties incentives as provided for in the general applicable legislation.

Stamp duty and other benefits

An exemption from stamp duty is available on the incorporation of companies or 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.

Touristic Utility Status (Estatuto de Utilidade Turística)

Cabo Verde may grant Touristic Utility Status to the following types of touristic projects:

• installation, granted to new tourist resorts and facilities;
• operation and exploitation, granted to existing tourist resorts and facilities; and
• refurbishment, granted to existing tourist resorts and facilities in connection with improvements and expansions.

Touristic 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;
• an exemption from IUP on the acquisition of real estate used for the construction and installation of touristic projects, if granted by the municipality;
• a reduced rate of 5% of customs duties on the importation of materials and equipment used in touristic projects; and
• exemptions from stamp duty on the financing of tourism investments.

Tax Incentives for Renewable Energies

There is a regime for the promotion of independent production and self-production of electricity based on renewable energy sources, which are considered to include water, wind, solar, biomass, biogas or industrial, agricultural or urban waste, oceans and tides, and geothermal. Under the regime, renewable energy producers may benefit from the following.

CIT benefits

A CIT credit is available for up to 20% 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.

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.

Shipping Transport Industry Incentives

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 permanent job created:

• CVE26,000 for each job created in the municipalities of Boa Vista, Praia and Sal;
• CVE30,000 for each job created in the remaining municipalities; and
• CVE35,000 in the case of a disabled person.

Media, Telecommunications and the Internet

The importation of goods, materials, equipment, vehicles and other equipment exclusively for the purpose of telecommunications and media is exempt from customs duties.

Incentives for the Importation of Vehicles

The importation of the following heavy vehicles for the collective transport of passengers is exempt from VAT and excise duty if such vehicles are not aged more than six years, and is subject to a reduced rate of 5% of customs duties:

• heavy passenger vehicles for the collective transport of passengers comprising more than 30 seats, including the driver, when imported by duly licensed companies operating in the respective sector;
• heavy passenger vehicles for the collective transport of passengers comprising more than 12 seats, including the driver, when imported by a public transporter with the respective permit that is in the process of replacing licensed vehicles, as contained in the General Legal Regime of Transport in Motor Vehicles (Regime Jurídico Geral de Transportes em Veículos Motorizados);
• heavy passenger vehicles intended for school transport, duly equipped, comprising more than 23 seats, including the 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; and
• heavy goods vehicles with three or more axles, as well as heavy vehicles with two or three axles, intended solely for towing trailers and semi-trailers for the carriage of goods (in this specific case, there is no limitation regarding the age of the vehicle).

During 2026, 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 the importation is 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.

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

During 2026, the import of light passenger vehicles, in new condition, intended exclusively for the operation of taxi services is exempt from excise duties and subject to a reduced import duty rate of 5%.

The import of four-by-four (4x4) vehicles for adventure tourism is also exempt from excise duties for 2026 when imported by companies operating in the adventure tourism sector and duly licensed by the competent authorities.

Incentives Under the Young Start-Ups Programme

Incentives for corporate finance

Resident or non-resident entities with a PE in Cabo Verde that make cash capital contributions to companies eligible under the Young Start-Ups Programme, or to companies based in municipal territories where the average GDP per capita in the last three years is below the national average, as well as to micro and small companies, can deduct part of these contributions up to 2% of the 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 the conventional remuneration of share capital.

Other incentives

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

• a CIT rate of 5%, applicable in the first five years of activity, starting 1 January 2019, except in the case of information, communication and technology and research and development enterprises, whose rate is 2.5% regardless of the location of the head office or place of effective management;
• an exemption from customs duties, excise duty and VAT on the importation of one vehicle, with a maximum age of five years, for the transport of goods, comprising up to three seats in the cabin, including the driver, intended exclusively for the respective activity;
• an exemption from import duties on the importation 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 if 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 the legislation of micro and small companies;
• an exemption from stamp duty on financing agreements for the development of the respective activities; and
• a 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 places of effective management are 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, and from the incentives for employers hiring young people.

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

Incentives for Electric Mobility

The importation of electric vehicles, including two-wheel vehicles, is exempt from VAT, customs duties and excise duties. The exemption from VAT and customs also applies to the importation of new rechargeable batteries for electric vehicles, including their connectors, shields, connecting cables and meters, intended exclusively for charging.

Parking fees for such electric vehicles are also exempt from VAT.

Incentives for the Industrial Production of Inerts

During 2026, 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 the extraction of minerals, applicable to projects located in the islands of Brava, Fogo, Maio, São Nicolau and Santo Antão.

Tax Benefits Regarding the Recovery of Business and Insolvency

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 the income tax paid abroad or the CIT fraction calculated before the deduction is given, corresponding to incomes that may be taxed in the country concerned, net from any costs or losses, directly or indirectly incurred, for the purposes of its realisation. Foreign tax credit cannot exceed the tax outlined in the tax treaty, if applicable.

The group taxation regime may apply if one of the companies directly or indirectly holds at least 75% of the statutory capital of the others and more than 50% of the voting rights. The option to apply this special taxation regime for groups of companies can only be made when such groups meet the following cumulative requirements:

• tax resident in Cabo Verde;
• subject to the normal regime of taxation at the highest corporate tax rate;
• maintain a minimum holding participation of 75%;
• all companies have been held by the parent company for more than one year (excluding newly incorporated companies);
• not dormant for more than one year;
• not dissolved or insolvent;
• no tax losses in the three years prior to the regime application, unless the companies have been held by the parent company for more than two years; and
• the tax period is not different from that of the parent company.

Furthermore, the parent company must not be controlled by any other Cabo Verde-resident company that meets the criteria to be a parent company, and should not have opted out of this regime in the past three years.

There is a limitation on the tax deductibility of net financing expenses, which are only deductible up to the higher of the following limits:

• CVE110 million; or
• 30% of earnings before depreciation, net financing expenses and taxes.

There is a transfer pricing regime which establishes that commercial transactions between associated enterprises should be subject to identical terms and conditions to those that would be accepted and agreed between independent entities (the arm’s length principle).

Taxpayers must keep information and documentation regarding their transfer pricing policies on hand. The following taxpayers must prepare a transfer pricing documentation file:

• entities classified as “Large Taxpayers”;
• entities considered to be taxed under a privileged tax regime, as defined in the General Tax Code;
• PEs of non-resident entities; and
• other entities designated as such by the tax authorities.

Cabo Verdean law provides for anti-evasion rules.

Cabo Verde’s tariff regime is fairly open and liberal, with its customs regime based primarily on the Economic Community of West African States (ECOWAS) Common External Tariff (TEC), although the nation has not yet fully adopted all of its regional components. The regime of national tariffs and customs is regulated by the Customs Code (Código Aduaneiro), complemented by specific taxation tools like Import Duty (Direitos de Importação) and other indirect taxes like VAT (IVA).

Structure of Import Duties

Import duties in Cabo Verde tend to range between 0% and 50% of the goods’ value, depending on their nature and classification. The standard structure has the following layers:

• Import Duty (Direito de Importação) is an ad valorem tax on the cost, insurance and freight value;
• Environmental Tax (Taxa Ecológica) is applied to some products – eg, cars, plastics or second-hand electrical goods;
• Consumption Tax (Imposto sobre Consumos Especiais – ICE) is applied to items such as alcohol, tobacco and luxury items; and
• VAT (IVA) at an overall rate of 15% is applied to imports, unless exempt.

Cabo Verde also provides tariff relief or exemptions under specific conditions, such as for:

• basic necessity foodstuffs and medicines;
• equipment and materials for development projects or investment under tax incentive laws; and
• products of countries with which Cabo Verde has preferential trade arrangements, specifically the European Union under the EU–Cape Verde Special Partnership, and selected African nations under AGOA and ACP-EU.

Tariffs are at a maximum on goods that are aimed at sustaining local industry or non-essential or luxury goods, including:

• vehicles (second-hand ones in particular), with heavy taxes and green charges;
• alcoholic beverages and tobacco products, with ICE and other import duties;
• textiles and apparel, at times to sustain local capacity; and
• plastic goods and electronics, notably second-hand, to protect the environment.

The Competition Authority (Autoridade da Concorrência, or AdC) in Cabo Verde regulates or controls mergers between companies or entities.

Certain sectors also have specific entities that may regulate certain operations, as follows:

• the Central Bank of Cabo Verde for the finance and insurance sectors;
• the Civil Aviation Authority for the aviation sector; and
• the Multisectoral Regulatory Agency for the Economy for the telecoms sector.

Mergers that meet the criteria set out in the Cabo Verde Competition Act are subject to prior notification to the AdC.

See 6.2 Merger Control Procedure.

See 6.2 Merger Control Procedure.

A patent is an exclusive right that can be granted to any type of invention in any field of technology, whether it is a product or a process, or to new processes for obtaining products, substances or compounds that already exist. There are three patentability requirements in the Industrial Property Code:

• novelty;
• inventive step; and
• industrial application.

A patent shall confer the exclusive right to use the invention anywhere in the national territory, and shall also confer on its owner the right to prevent third parties from manufacturing, offering, stocking, trading or using the product that is the subject of the patent without their consent, and from importing or holding it for any of these purposes.

The registration of a patent is filed with the Institute of Quality Management and Intellectual Property (IGQPI).

Generally, patent rights will be enforced and validated before the First Instance Courts. Whoever illegally violates the industrial property rights of another person, with criminal intent or by mere blame, must pay compensation to the injured party for the damages resulting from the violation. For this purpose, the IP right-holder must prove the causality of the infringement for the damages calculation. The injured parties can also resort to criminal courts for criminal cases.

The length of protection is 20 years.

Trade marks are signs used in trade to identify products and services, and can consist of a sign or set of signs capable of being represented graphically – ie, words (including names of people), designs, letters, numbers, sounds, and the shape of the product or its packaging. A trade mark may also consist of advertising slogans for goods or services to which they refer, irrespective of copyright protection afforded to them, provided they are of distinctive character.

The registration of the trade mark grants the right-holder the ownership and exclusive use of the trade mark for the products and services that the mark designates.

The registration of a trade mark is filed with the IGQPI.

Generally, trade mark rights will be enforced and validated before the First Instance Courts. Anyone who illegally violates the industrial property rights of another person, with criminal intent or by mere blame, must pay compensation to the injured party for the damages resulting from the violation. For this purpose, the IP right-holder must prove the causality of the infringement for the damages calculation. The injured parties can also resort to criminal courts for criminal cases.

Protection lasts for ten years from the date of the respective concession and can be renewed indefinitely for equal periods.

A design shall mean the ornament or aesthetic aspect of an article, including the appearance of the whole, or part, of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture or materials of the product itself and its ornamentation. Designs that are contrary to public order, public health or morality cannot be registered.

The registration of an industrial design is filed with the IGQPI. The scope of the protection conferred by the registration shall cover all designs that do not give a different overall impression to an informed user. Registration of a design shall confer on its holder the exclusive right to use it, and shall prohibit its use by third parties without the holder’s consent, if such acts are carried out for commercial purposes.

Generally, industrial design rights will be enforced and validated before the First Instance Courts. Anyone who illegally violates the industrial property rights of another person, with criminal intent or by mere blame, must pay compensation to the injured party for the damages resulting from that violation. For this purpose, the IP right-holder must prove the causal relationship between the infringement and the injury for the damages calculation. The injured parties can also resort to criminal courts for criminal cases.

Copyright is defined as the exclusive right of authors of literary, artistic and scientific works to enjoy, use and exploit such works or to authorise their enjoyment, use or exploitation by third parties, either in whole or in part. Copyright shall comprise economic rights and personal rights, with the latter being known as moral rights. As a rule, copyright is recognised regardless of registration of the work, its deposit or any other formality.

Copyrighted works are enforced before the First Instance Courts. If the right-holder has their right infringed, they can request compensation. Whoever illegally violates the copyright of another person, with criminal intent or by mere blame, must pay compensation to the injured party for the damages resulting from the violation. For this purpose, the copyright-holder must prove the causality of the infringement for the damages calculation. The injured parties can also resort to criminal courts for criminal cases.

Non-patrimonial damages may also be compensated if caused by the infringer’s acts.

Generally, protection is for the lifetime of the author plus 50 years following their death, even if it is a posthumous work. The length of protection for copyright in works of photography or applied arts is 25 years after such works are produced.

Software, databases and trade secrets are protected under the regime of industrial and intellectual rights.

In Cabo Verde, the personal data protection legislation currently in force is the Constitution of the Republic of Cabo Verde and Law 133/V/2001, of 22 January.

The Constitution establishes that all citizens shall be guaranteed the right to personal identity, the development of personality and civil capacity, which may only be limited by a judicial decision and in the cases and terms established in the law, and that all citizens shall have the right of access to computerised data that affects them and for the same to be rectified and updated, as well as the right to be informed about the purposes of the data, in the terms of the law.

The Constitution also grants the right of habeas data to ensure knowledge of the information contained in files, computer archives and registers that affects subjects, and to be informed about the purposes of the data and for the same to be rectified or updated.

Law 133/V/2001, of 22 January, establishes the general legal framework for the protection of individuals with regard to the processing of personal data. It applies to the processing of personal data wholly or partly by automated means, and to the processing of personal data other than by automated means contained in manual files or part of manual files. The law shall also apply to the processing of personal data carried out:

• in the context of the activities of an establishment of the controller situated within the national territory;
• outside the national territory in places where the Cabo Verdean law applies by virtue of international public law; and
• by a controller who is not established on the national territory, who, for purposes of processing personal data, makes use of automated or other types of equipment situated in the national territory, except where such equipment is used only for purposes of transit.

Law 133/V/2001, of 22 January, applies in an international context where there are any international treaties in place.

The competent authority is the Comissão Nacional de Protecção de Dados (the National Commission of Data Protection, or CNPD), which is an independent administrative entity that exercises its authority throughout the national territory.

Generally, the CNPD is the national authority endowed with the power to supervise and monitor compliance with the laws and regulations in the area of personal data protection, with strict respect for human rights and the fundamental freedoms and guarantees enshrined in the Constitution and the law.

Some reforms are expected in relation to the Recovery of Business and Insolvency Code.