The 2021 State Budget was approved by Law No. 109/IX/2020, of 31st December. The State Budget does not provide for changes to tax codes. With regard to fiscal measures foreseen annually, it is worth noting the implementation of new measures, some of which were already considered in the Supplementary State Budget for 2020. Some of the fiscal incentives foreseen annually have also changed, and some are incentives exceptionally foreseen as a result of the current pandemic and with a view to support businesses. Below is a summary of the main benefits and incentives.
1. Reduced VAT rate of 10% in the tourism sector remains during 2021, being applicable to: (i) accommodation services in hotels and similar establishments and restaurant services; and (ii) operations organized by Tour Operator Agencies that are micro, small or medium-sized resident companies, when all the combined services are provided and performed in Cape Verde during 2021.
2. Exceptional regime for Social Security Contributions, with (i) possibility of payment by the employer, in up to sixty installments, of such debts related to the fiscal period of 2020, with exemption from compensatory interest and late payment interest, and (ii) exemption from payment of such contributions by certified micro and small companies most impacted by COVID 19 (reduction in turnover equal to or greater than 50% compared to the same period in the previous year), namely in the transport, hotel and restaurant sectors.
3. Exceptional regime for payment of tax debts in installments, provided for in the Supplementary State Budget for 2020, remains in force in 2021, but debts that are not negotiated and are outstanding on 31 December 2021 are automatically subject to enforced collection, under the terms provided for in the applicable legislation.
4. State allowance for expenses with certification or accreditation incurred by micro and small companies, introduced in 2020 through the corresponding Supplementary State Budget.
5. Distance learning incentives remain, one of the exceptional and temporary measures introduced with the 2020 Supplementary State Budget, notably exemption from customs duties, import VAT and VAT on the acquisition of laptops, desktop and tablet computers by educational or professional training establishments, as well as by students enrolled in those institutions, also benefiting from exemption from stamp duty in relation to credits granted for their import or acquisition.
6. Incentives to recruit unemployed persons registered with the Employment and Professional Training Centers, which had already been introduced by the Supplementary State Budget for 2020, notably: attribution of (i) tax deductions per hiring, for a minimum period of 12 months; and (ii) state subsidies, for a period of 12 months, to taxpayers covered by the Special Regime for Micro and Small Companies, or by the organized accounting regime, which create 5 or more jobs, in the form of payment of 50% of the salary (up to CVE 25,000) for at least 2 employees.
7. Creation of incentives for the acquisition of accounting and billing equipment, and software, following the implementation of the electronic invoice mechanism, with such costs being deductible for IRPC purposes at 130% of their respective value.
8. Increase of the Government's contribution for payment of subsidies for professional internships, reducing however the extra time period of contribution in cases where the internship is followed by an employment contract.
9. Incentives for mobility are maintained only in relation to electric vehicles, notably exemption from VAT, excise duty and import duties, thus ceasing to apply such incentives to hybrid vehicles.
10. Incentives for the construction of infrastructures for sports, when carried out by certain entities, including federations, sports associations and sports clubs, subject to certain requirements; and incentives for the implementation of international fiber optic cable projects, including exemption from withholding tax on IRPC for services provided by non-residents without a permanent establishment in Cape Verde, within the scope of the execution of these projects, which had already been introduced by the 2020 Supplementary State Budget.
11. Maintenance of several incentives foreseen annually, namely: (i) Youth Start-up Program; (ii) financing of companies eligible under the Youth Start-up Program; (iii) to employers hiring young people; (iv) exemptions on importation of taxis; (v) exemptions on importation of heavy public transport vehicles and light passenger vehicles for purposes of executive transport; (vi) exemptions on importation of heavy transport vehicles for tourists; (vii) exemptions on importation of equipment for quality certification; (viii) exemption of customs duties for the digital terrestrial television implementation project; (ix) exemptions on importation of food, medicines and irrigation materials; (x) exemptions in relation to water desalination used in agriculture; and (xi) benefits to farmers and livestock keepers in the context of regularization of rural buildings.
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