Cabo Verde Tax Regime

Cabo Verde operates a classical corporate income tax system layered onto a progressive personal income tax, within a small, open, service- and tourism-oriented economy that is a full member of the Southern African Development Community's northern trading partners and maintains close fiscal and monetary ties with Portugal and the European Union through its currency peg. Resident companies are taxed on worldwide profits at a flat 20% rate, supplemented in two municipalities by a fire-brigade surcharge that raises the effective rate to 20.40%. A simplified single special tax regime removes micro and small companies from the standard corporate, VAT and social-security net entirely, replacing it with a single turnover-based levy. Cabo Verde has begun to engage with the OECD/G20 Pillar Two framework, signing the multilateral Subject-to-Tax Rule convention in 2024 and legislating a qualified minimum tax for 2026. The administration is compact, treaty coverage is still developing, and rulings practice is less mature than in larger economies, so taxpayers commonly rely on statutory guidance and direct engagement with the tax authority (Direção Nacional de Receitas do Estado).

1.1 Sources

Primary legislation includes the Corporate Income Tax Code (Código do Imposto sobre o Rendimento das Pessoas Colectivas), the Personal Income Tax Code (Código do Imposto sobre o Rendimento das Pessoas Singulares), the General Tax Code (Código Geral Tributário), the VAT Code and the annual State Budget Law (Orçamento do Estado).

1.2 Recent developments

The 2026 State Budget Law introduced Cabo Verde's qualified global minimum tax framework under the Pillar Two initiative, applying a 15% effective-tax-rate standard to constituent entities of in-scope multinational and large domestic groups with annual consolidated revenues of at least EUR 750 million; detailed assessment and collection rules are to follow in standalone legislation. This follows Cabo Verde's September 2024 signature of the multilateral convention implementing the Pillar Two Subject-to-Tax Rule, which allows Cabo Verde, as a source country, to apply a top-up withholding tax on certain outbound related-party payments that are taxed below a 9% minimum rate in the recipient jurisdiction. The single special tax regime for micro and small companies, the fire-brigade surcharge and the standard 20% corporate rate continue unchanged into 2026.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

Companies incorporated or effectively managed in Cabo Verde are resident and subject to corporate income tax (Imposto sobre o Rendimento das Pessoas Colectivas, IRPC) on worldwide profits at a flat rate of 20%. Non-resident companies operating through a permanent establishment are taxed at the same 20% rate on Cabo Verde-source profits attributable to that establishment. Non-resident companies without a permanent establishment are instead subject to final withholding tax on Cabo Verde-source income, at rates that vary between 1% and 20% depending on the income category under the Tax Code. There is no separate minimum tax charge for ordinary companies outside the simplified regime described below.

A fire-brigade surcharge (Taxa de Incêndio) of 2% of the tax due applies in the municipalities of Praia (Santiago) and Mindelo (São Vicente), raising the effective combined corporate rate to 20.40% for companies based in those two cities. Companies elsewhere on the archipelago remain at the headline 20% rate.

2.2 Dividends and participation exemption

Cabo Verde applies a participation exemption to dividends received by a resident company from a qualifying subsidiary, generally requiring a minimum shareholding threshold held for a minimum uninterrupted holding period, subject to the subsidiary being subject to a comparable tax and not resident in a listed low-tax jurisdiction. Dividends that do not qualify are included in ordinary taxable income at the standard 20% rate, with underlying withholding tax and, where applicable, treaty relief taken into account. Capital gains on qualifying participations can likewise benefit from exemption or reduced taxation where the statutory holding and activity conditions are met; gains falling outside the exemption are taxed as ordinary income.

2.3 Income determination and deductions

Taxable profit is computed from the accounting result determined under local accounting rules (the Cabo Verdean accounting normalisation system), adjusted for tax purposes for items such as non-deductible provisions, excessive representation and entertainment expenses, and fines and penalties. Ordinary business expenses incurred to generate taxable income are deductible when properly documented. Depreciation follows statutory rates by asset category, generally on a straight-line basis, with accelerated rates available for certain qualifying investments. Tax-deductible provisions are limited to specified categories such as doubtful debts and standard sectoral risks; general or contingency provisions are not deductible.

2.4 Interest limitation

Deductibility of net financing costs is subject to a general arm's-length and business-purpose test, with related-party debt scrutinised under thin-capitalisation-style and transfer-pricing principles to deny relief on borrowing that is disproportionate to the borrower's equity and business needs or that is not priced at arm's length. Interest on loans used to finance non-business assets or shareholder distributions is likewise vulnerable to disallowance. There is no numerical EBITDA-ratio cap of the EU ATAD type; the constraint operates instead through documentation, arm's-length pricing and anti-abuse review.

2.5 Losses

Tax losses may be carried forward for a limited number of years following the loss-making period, subject to periodic legislative adjustment of the carryforward horizon, and can generally be used to offset a capped proportion of taxable profit in later years rather than the full amount, with the balance rolling further forward within the permitted window. There is no loss carryback. Continuity-of-ownership and continuity-of-activity conditions restrict the transfer of accumulated losses on a change of control or a material change in the company's business.

2.6 Group taxation

Cabo Verde permits qualifying groups of resident companies linked by a substantial direct or indirect shareholding to elect a special group taxation regime under which the taxable results of group members are aggregated at the level of the dominant company, allowing current-year losses of one group member to offset current-year profits of another. Entry conditions include minimum ownership thresholds, a minimum holding period and exclusion of companies benefiting from certain incompatible incentive regimes. Exit from the group before the minimum period can trigger recapture of the tax advantage obtained.

2.7 Controlled foreign companies

Cabo Verde's anti-avoidance framework includes controlled-foreign-company-style attribution rules under which the passive or low-taxed income of a foreign subsidiary or permanent establishment controlled by a Cabo Verdean resident company can be attributed to and taxed in the hands of the resident controller where the foreign entity is subject to a materially lower effective tax burden than the domestic rate and lacks adequate substance. As implementation of these rules develops alongside Cabo Verde's broader BEPS engagement, groups with offshore holding or financing entities should monitor substance and effective-tax-rate exposure closely.

2.8 Transfer pricing

Related-party transactions must be priced on an arm's-length basis, with taxpayers above statutory size thresholds required to prepare contemporaneous transfer pricing documentation demonstrating the pricing methodology applied, broadly consistent with OECD Transfer Pricing Guidelines principles as adapted domestically. The tax authority can adjust related-party pricing that fails the arm's-length standard, with corresponding adjustments and mutual agreement procedure relief available under Cabo Verde's limited treaty network. Documentation obligations are lighter than the three-tier master file/local file/country-by-country model used in larger economies, reflecting Cabo Verde's smaller taxpayer base.

2.9 Incentives

Cabo Verde offers targeted tax incentives for tourism, industrial free-zone, renewable-energy and export-oriented investment, typically structured as temporary reductions in the corporate rate, accelerated depreciation, customs-duty relief on capital goods, and exemptions from certain municipal or transaction taxes, subject to job-creation and investment-value conditions under the Investment Code. The single special tax (SST) regime described in section 2.1 functions as a standing simplification incentive for micro and small enterprises, replacing corporate tax, VAT, the fire-brigade surcharge and employer social-security contributions with a single 4% levy on gross turnover, paid quarterly.

2.10 Pillar Two

Cabo Verde signed the multilateral convention implementing the Pillar Two Subject-to-Tax Rule in September 2024, permitting Cabo Verde to apply a top-up source withholding tax where certain outbound related-party payments (such as interest, royalties and services fees) are taxed below a 9% minimum rate in the counterparty jurisdiction under a qualifying tax treaty. The 2026 State Budget Law separately introduced a qualified global minimum tax under the BEPS Pillar Two initiative, applying a 15% minimum effective tax rate to constituent entities located in Cabo Verde that belong to multinational or large domestic groups with annual consolidated revenue of at least EUR 750 million. Detailed computational, filing and safe-harbour rules are to be set out in follow-on legislation and regulations, so in-scope groups should monitor implementing guidance closely while budgeting for eventual registration and reporting obligations.

2.11 Branch income and reorganisations

A branch or other permanent establishment of a foreign company is taxed at the standard 20% rate (20.40% including the fire-brigade surcharge where applicable) on profits attributable to the Cabo Verde establishment, computed under the same rules as for resident companies; there is no separate branch remittance tax on repatriation of after-tax branch profits. Domestic reorganisations — mergers, demergers and contributions of business between resident companies — can qualify for tax-neutral treatment (deferral of gains and continuity of tax attributes including loss carryforwards, subject to the continuity conditions in section 2.5) where conducted for genuine commercial reasons and notified to the tax authority; reorganisations lacking economic substance can be recharacterised and taxed on the underlying gain.

3.1 Residence and rates

Individuals resident in Cabo Verde — broadly, those present for more than 183 days in a tax year or maintaining a habitual home there — are taxed on worldwide income; non-residents are taxed only on Cabo Verde-source income. Employment and most other categories of income are taxed under a progressive schedule (Imposto sobre o Rendimento das Pessoas Singulares, IRPS) with rates rising through successive bands to a top marginal rate in the region of 25–27.5% on higher income tranches, alongside a tax-exempt initial band that keeps low earners outside the charge. Non-residents without a permanent establishment are generally subject to final withholding at flat rates on Cabo Verde-source employment, professional and investment income rather than the progressive schedule.

3.2 Capital income and real estate

Dividends, interest and most other investment income received by resident individuals are generally subject to final withholding tax at a flat rate, commonly around 20%, which discharges the individual's liability without the need to include the income in the progressive schedule, though taxpayers may in some cases elect aggregation where advantageous. Capital gains on the disposal of Cabo Verdean real estate are taxed under specific municipal property-transfer and capital gains rules, while gains on shares and other financial instruments are generally taxed at a flat rate similar to that applied to other investment income. Rental income is taxed at progressive or flat withholding rates depending on the recipient's status, with allowable deductions for maintenance and related property expenses.

3.3 Social security and payroll

Employees and employers both contribute to the National Institute of Social Security (Instituto Nacional de Previdência Social), with employee contributions withheld at source by the employer at a rate in the region of 8% of gross salary and employer contributions payable in addition at a materially higher rate, funding pensions, health and family-benefit schemes. Employers withhold IRPS from monthly salary under a pay-as-you-earn system and remit both tax and social-security contributions to the respective authorities on a monthly basis. Employers electing the single special tax regime for micro and small companies settle social-security obligations attributable to the company within that single turnover-based levy rather than through separate contributions.

3.4 Inbound individuals

Cabo Verde does not levy a general net wealth tax, and inheritance and gift transfers are addressed through municipal property-transfer duty rather than a dedicated national inheritance tax, with close-family transfers typically benefiting from reduced rates or exemptions. Inbound employees and investors commonly structure remuneration through Cabo Verde's investment and residency programmes, which can offer customs and tax facilitation for qualifying foreign direct investment, including in tourism and renewable energy. Individuals relocating from higher-tax jurisdictions should confirm treaty relief where available, as Cabo Verde's double-tax treaty network remains limited relative to larger economies, increasing reliance on unilateral foreign-tax-credit relief for cross-border income.

Cabo Verde imposes final withholding tax on a range of Cabo Verde-source payments to non-residents without a local permanent establishment, with statutory rates generally ranging from 1% to 20% depending on the category of income, and separate flat withholding on Cabo Verde-source investment income paid to residents. Cabo Verde's tax treaty network is more limited than that of larger economies, with a small number of conventions in force (including with Portugal) providing reduced withholding rates and relief from double taxation; in the absence of a treaty, unilateral relief may be available through domestic credit mechanisms for foreign tax paid. The 2024 Pillar Two Subject-to-Tax Rule convention adds a further layer, allowing Cabo Verde to apply a top-up withholding charge on qualifying outbound payments taxed below 9% abroad under a covered treaty.

Because Cabo Verde's treaty network is narrow, most inbound and outbound cross-border payments are governed by domestic withholding rates rather than treaty-reduced rates; groups should confirm treaty coverage on a counterparty-by-counterparty basis rather than assuming relief. Relief at source generally requires the payer to hold appropriate residence documentation for the beneficial owner; absent that documentation, withholding applies at full domestic rates subject to any subsequent refund claim.

5.1 General anti-abuse and hybrids

The General Tax Code contains a general anti-abuse rule empowering the tax authority to disregard or recharacterise arrangements entered into predominantly to obtain a tax advantage inconsistent with the purpose of the law, alongside specific anti-abuse provisions targeting related-party financing, participation-exemption abuse and the controlled-foreign-company attribution rules described in section 2.7. As Cabo Verde continues to align with international BEPS standards, hybrid-mismatch-style concerns — deduction without corresponding inclusion, or double deduction across jurisdictions — are addressed primarily through the general anti-abuse rule and arm's-length pricing requirements rather than a dedicated hybrid-mismatch code of the EU ATAD type.

5.2 Exit taxation and disclosure

Migration of a company's tax residence out of Cabo Verde, or the transfer abroad of assets or business functions previously taxed in Cabo Verde, can trigger taxation of unrealised gains determined at the time of transfer, consistent with the general principle that gains built up under Cabo Verdean tax jurisdiction should be taxed before assets leave that jurisdiction. Cabo Verde does not yet operate an EU-style mandatory disclosure regime for cross-border arrangements, but the general anti-abuse rule and transfer-pricing documentation requirements give the tax authority visibility into aggressive structuring. Substance requirements are increasingly emphasised in administrative practice for holding and financing vehicles seeking treaty or incentive benefits, consistent with Cabo Verde's broader Pillar Two and BEPS engagement.

6.1 VAT

Value added tax is levied at a standard rate of 15% on the supply of goods and services and on imports, with a reduced rate applicable to specified essential goods and exemptions for items such as basic foodstuffs, health, education and financial services. Registration is compulsory for businesses above the statutory turnover threshold, below which small taxpayers may fall within the simplified regime or the single special tax described in section 2.9. Returns are generally filed monthly, with input VAT recoverable against output VAT for taxable activities and refund procedures available for structural credit positions such as exporters. Businesses electing the single special tax regime are outside the ordinary VAT system altogether, as VAT is subsumed within that single levy.

6.2 Transaction, payroll and other taxes

Transfers of real estate attract municipal property-transfer tax (Imposto Único sobre o Património, or equivalent municipal stamp duty on transfers) at rates that vary by municipality, alongside an annual municipal property tax on ownership of real estate. Stamp duty applies to a range of legal instruments and financial transactions, including loan agreements and certain contracts, at rates set out in the Stamp Duty Code. Employers bear payroll-related social-security contributions as described in section 3.3, and specific excise duties apply to fuel, tobacco, alcohol and vehicles. Cabo Verde does not levy a general net wealth tax on individuals or companies.

7.1 Filing, assessment and audit

The tax year is generally the calendar year, and corporate taxpayers file an annual corporate income tax return with the Direção Nacional de Receitas do Estado, supported by financial statements prepared under the local accounting normalisation system. Provisional payments on account are due during the tax year based on the prior year's assessed liability, with a balancing payment or refund following submission of the annual return. Audits are conducted on a risk basis, with the tax authority empowered to request books, records and transfer-pricing documentation, and to raise additional assessments within the statutory limitation period, typically several years from the end of the relevant tax year.

7.2 Rulings, appeals and penalties

Taxpayers may request binding rulings from the tax authority on the tax treatment of specific transactions, providing a measure of certainty in advance of filing, though the rulings practice is less developed than in larger jurisdictions. Assessments can be challenged first through administrative appeal to the tax authority and subsequently before the tax courts, with the possibility of further appeal on points of law. Late payment attracts compensatory interest, and the General Tax Code imposes penalties for late filing, underpayment and non-compliance, with mitigation available for voluntary correction made before the start of an audit.

Taxpayers under the standard regime should reconcile provisional payments against the final assessed liability when filing the annual return, settling any balance due or claiming any refund at that point. Businesses electing the single special tax regime should monitor turnover against the micro and small company thresholds, since exceeding them requires migration to the standard corporate, VAT and social-security regimes from the following tax year.

9.1 Entity choice

The private limited company (Sociedade por Quotas) is the most common vehicle for foreign investment, offering limited liability with modest minimum capital requirements and flexible governance; the public limited company (Sociedade Anónima) suits larger or capital-market-oriented ventures. Branches of foreign companies are a viable alternative for market entry without local incorporation, taxed at the same 20% rate as resident companies with no additional remittance tax on profit repatriation. Micro and small enterprises should weigh the single special tax regime against the standard regime, since the 4% turnover-based levy can be materially simpler but may not always be cheaper than standard taxation once expenses and investment allowances are taken into account.

9.2 Structuring and incentives

Investors in tourism, renewable energy, industrial free-zone and export-oriented projects should assess eligibility for Investment Code incentives, which can include temporary corporate rate reductions, accelerated depreciation and customs relief on capital goods. Holding and financing structures should be tested against the participation exemption conditions in section 2.2, the controlled-foreign-company attribution rules in section 2.7, and the emerging Pillar Two Subject-to-Tax Rule exposure on outbound low-taxed payments described in section 2.10. Given Cabo Verde's narrow treaty network, cross-border financing and royalty flows should be modelled on domestic withholding rates rather than assumed treaty relief unless a specific treaty is confirmed to apply.

9.3 Worked effective-rate illustration

A Cabo Verde-resident company based in Praia earns EBITDA of CVE 60,000,000, books depreciation of CVE 8,000,000 and net interest expense of CVE 4,000,000, all deductible under the arm's-length and business-purpose tests in section 2.4. Taxable profit is 60,000,000 − 8,000,000 − 4,000,000 = CVE 48,000,000. Corporate income tax at the standard 20% rate is CVE 9,600,000. Because the company is based in Praia, the 2% fire-brigade surcharge on the tax due adds 9,600,000 × 2% = CVE 192,000, giving total corporate tax of CVE 9,792,000, an effective rate of 9,792,000 / 48,000,000 = 20.4% on taxable profit — precisely matching the quoted combined statutory rate. If the after-tax profit of 48,000,000 − 9,792,000 = CVE 38,208,000 were fully distributed to a resident individual shareholder and taxed at the flat 20% investment-income withholding rate, the additional shareholder-level tax would be 38,208,000 × 20% = CVE 7,641,600, giving a combined corporate-and-shareholder burden of (9,792,000 + 7,641,600) / 48,000,000 ≈ 36.3% on the original taxable profit.

9.4 Compliance

Expect monthly VAT and payroll compliance (or quarterly single special tax compliance for eligible micro and small companies), an annual corporate income tax return supported by financial statements, transfer pricing documentation above the applicable size thresholds for related-party dealers, and municipal property-tax and transfer-duty compliance on real estate holdings. Groups within scope of the 2026 Pillar Two legislation should begin tracking consolidated revenue against the EUR 750 million threshold and monitoring forthcoming implementing regulations for registration and top-up-tax return obligations.