The State Budget for 2023 was enacted by means of Law No. 16/X/2022, of 30 December 2022 (“2023 State Budget”), having entered into force on 1 January 2023. The 2023 State Budget maintains some tax policies established in the 2022 State Budget, but contains relevant changes, in particular in terms of tax benefits. We describe below the main changes and tax and financial policies foreseen in the 2023 State Budget:

1. Changes to the Tax Benefits Code, namely regarding customs benefits available to (i) investments carried out under the Investment Law in relation to equipment and vehicles, (ii) industrial companies registered in the Industrial Register, and (iii) diplomatic missions and consular offices, their agents and officials.

2. Changes to the IRPC Code – (i) Elimination of the IRPC non-deductibility rule for sickness and personal accident insurance premiums that are not effectively taxed as income from dependent work under the IRPS rules or required by law or contract; (ii) The amounts incurred with health or sickness insurance premiums (subject to compliance with requirements) are accepted as costs for IRPC purposes; (iii) The fractional IRPC payments due by taxable persons covered by the tax transparency and organized accounting regimes (Category B) correspond to 15% of the taxable profit of the immediately preceding year.

3. Elimination of the rule of the VAT Code and of the Special Legal Regime for Micro and Small Companies that established, for taxpayers exempt from invoicing, the obligation to include the taxpayer number (NIF) in sales and services receipts where the amount is equal or higher than 20,000$00 (twenty thousand escudos).

4. Changes to the Customs Tariff, approved by Law No. 49/IX/2019, of 27 February 2019: (i) new rates of Excise Tax and Customs Duties provided for the importation of gasoline, diesel, and fuel; (ii) new Excise Tax rates applicable to new vehicles; (iii) new tax rate on the importation of alcoholic beverages.

5. Amendments to the tax-free regime and duty-free stores, approved by Decree-Law No. 51/2017, of 15 November 2017, namely regarding exemptions from Excise Tax and VAT, and licensing procedures.

6. Amendments to the regime that created the Special Economic Zone of Maio Island (ZEEIM), including on the requirements for IRPC benefits to apply.

7. Tourist contribution increased to 276$00 (two hundred and seventy-six escudos).

8. Creation of new incentives:

i. Reinvestment of profits, with the profits reinvested by technology-based companies authorized to operate in the Special Economic Zone for Technologies (ZEET) being exempt from IRPC.

ii. For emigrants, through exemption from taxation on certain income from bonds or similar.

iii. The undertaking of professional activity provided remotely from Cape Verde to outside (digital nomads) is exempt from IRPS (for one year) and from customs duties on the importation of materials and equipment for the undertaking of the activity.
iv. Renewable energy production: exemption from duties and other customs charges on imports of new and modern equipment, and accessories to produce renewable energy.
v. Regime of Tax Incentives in Business Research and Development, in force between 2023 and 2038, not cumulative with other tax benefits, which provides for the following benefits: (a) Deduction from the IRPC due of a percentage of expenses with relevant investments in research and development (which have not been subject to financial contribution by the State); (b) Exemption from stamp duty on financing operations; (c) Exemption from IUP on the acquisition of properties intended exclusively for the installation of investment projects; and, (d) 5% customs duty rate on the importation of eligible materials and equipment.

9. Maintenance of various incentives provided for in the 2023 State Budget, namely: (i) the Youth Start-up Program; (ii) financing regime for eligible companies under the Youth Start-up Program; (iii) increase of the value of expenses with certification or accreditation for purposes of deduction; (iv) for the acquisition of accounting and invoicing equipment and software within the scope of the process of joining the electronic invoice and installation of SAFT-CV; (v) for employers that hire young people; (vi) direct incentive to professional internships; (vii) contribution to the payment of professional internships; (viii) hiring support (with changes); (ix) for the importation of taxis; (x) for the importation of collective passenger transport vehicles and light passenger vehicles intended for executive transport; (xii) for the importation of heavy transport vehicles for tourists; (xiii) for electric mobility in relation to electric vehicles; (xiv) for the importation of equipment for certification of quality; (h) for the construction of venues for the practice of sports; (xv) for the implementation of the project to install international cable submarine for fiber optic; (xvi) within the project to implement digital terrestrial television; (xvii) remote learning; (xviii) interest rate subsidy on credits for micro production of renewable energy, contracted by families, and by micro and small companies; (xix) for purposes of applying the Fishing Vessel Chartering Regime; (xx) tax relief measures for electricity and water consumption.

10. The Special Regime for VAT on e-commerce remains applicable.

11. The Government is expected to adopt, in 2023, the necessary measures for the creation of the regime and definition of the governance model for the promotion of technology-based innovation through the creation of Free Technological Zones (ZLT).

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