The State Budget Bill for 2022 was approved in the global final vote. The State Budget Bill maintains some fiscal measures foreseen in the State Budget for 2021, but also contains relevant changes, notably on VAT. Below is a summary of the main fiscal changes and measures foreseen in the State Budget Bill for 2022:

1- 17% VAT rate to be applied during the year 2022 (currently 15%), with some exceptions.
 

2- The 10% reduced VAT rate in the tourist sector remains during 2022, 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 combined services are provided and performed in Cape Verde during 2022.
 

3- Changes to the VAT Code, including: (i) the inclusion to the concept of transfer of goods for VAT purposes of transfer of goods carried out using an electronic interface or similar means, as well as remote sales of goods imported from third territories for a final consumer located in Cape Verde, which will be subject to tax under the terms of special regulations to be enacted; (ii) new elements that must be included in invoices; (iii) redefinition of the rules for exempting invoicing and storage of supporting documentation for transactions subject to VAT. 
 

4- Creation of tax incentives for electricity and water consumption, to be applied during 2022: (i) 8% VAT rate on electricity and water supply to final consumers; and (ii) the deductible costs related to the acquisition of water and electricity will be considered at 130% of the corresponding value for the purposes of determining the taxable income for IRPC purposes for taxpayers subject to the organized accounting regime.
 

5- Change of various customs duty rates provided for in the Customs Tariff Schedule, approved by Law No. 20/VIII/2012, of 14 December 2012.
 

6- Creation of tax incentives for purposes of application of the Fishing Vessel Chartering Regime, notably exemption from taxation in Cape Verde (i) of income paid to non-resident workers and service providers in relation to work rendered on board of fishing vessels; and (ii) of income paid to entities non-resident in Cape Verde derived from service contracts and chartering contracts.
 

7- Maintenance of several incentives foreseen in the State Budget for 2021, notably: (i) the Youth Start-up Program; (ii) financing of companies eligible under the Youth Start-up Program; (iii) incentives to employers hiring young people; (iv) direct incentive to professional internships; (v) incentives in relation to expenses with certification or accreditation, including the State’s contribution to these expenses incurred by micro and small companies; (vi) incentives for the acquisition of accounting and billing equipment, and software, following the implementation of the electronic invoice mechanism and the installation of SAFT-CV; (vii) incentives to recruit unemployed persons registered with the Employment and Professional Training Centers; (viii) incentives for electric mobility as regards electric vehicles; (ix) exemptions  on imports of equipment for quality certification; (x) incentives for the construction of infrastructures for sports; (xi) incentives for the implementation of the international fiber optic submarine cable installation project; (xii) customs incentives for the digital terrestrial television implementation project; (xiii) distance-learning incentives; (xiv) interest rate subsidy in relation to credits for the micro-production of renewable energy, contracted by families and micro and small enterprises.
 

8- Maintenance of a few incentives foreseen in the State Budget for 2021, but with changes, notably: (i) contribution for payment of subsidies for professional internships; (ii) incentives on importation of taxis; (iii) incentives on importation of heavy public transport vehicles and light passenger vehicles for purposes of executive transport; (iv) incentives on importation of heavy transport vehicles for tourists.

For more information on this Tax Alert please contact:
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