Cabo Verde – Special Economic Zone for Technologies

In brief

Decree-Law no. 15/2022, of 12 May, published in the Official Gazette, creates and regulates the Special Economic Zone for Technologies (“Zona Económica Especial para Tecnologias” or “ZEET”) of Cabo Verde.

In detail

Decree-Law no. 15/2022, of 12 May, published in the Official Gazette, creates and regulates the Special Economic Zone for Technologies (“Zona Económica Especial para Tecnologias” or “ZEET”). ZEET is located in Praia, island of Santiago, and in Mindelo, island of São Vicente, in the Cabo Verde archipelago. The diploma establishes the rules for setting up and operating an entity in the ZEET, as well as the applicable tax and customs regime.

Scope of permitted activities

ZEET targets tech entities developing activities having the following characteristics:

• Promote or foster wealth, added value and job creation (specially, youth employment);
• Foster exportations;
• Promote a culture of innovation, fostering creativity at the level of technological R&D;
• Facilitate the development of digital services;
• Create favorable conditions for an incubation hub for tech startups.

Tax and customs regime

Besides being granted financial incentives, entities authorized to operate in the ZEET are granted the following tax and customs benefits:

• Reduced corporation tax (IRPC) rate of 2.5%;
• Exemption from IRPC or personal income tax (IRPS) applicable to entities who are shareholders of ZEET authorized entities concerning profits made available and interest and other types of remuneration of shareholders’ loans or advance payments made to the entity. This also includes interest due because of not receiving profits or other remuneration made available by the entity;
• Exemption from VAT;
• Exemption from Stamp Tax on the funding related with the investment;
• Exemption from Property tax (IUP);
• Exemption from custom duties on the import of certain materials (e.g. software), equipment, raw materials, consumables, finished and semi-finished goods; custom duties incurred are refundable in the case of the exemption not being granted;
• Exemption from notary fees on the incorporation and registration of the ZEET entity;
• 50% exemption on notary fees due on the purchase and sale of real estate used by the ZEET entity.

ZEET entities are required to comply with the tax obligations foreseen in the tax law, including transfer pricing, autonomous taxation, as well as assessment and payment of taxes. The tax obligations foreseen in the Tax Benefits Code (“Código dos Benefícios Fiscais”) for entities licensed in the International Business Center (“Centro Internacional de Negócios” or “CIN”) of Cabo Verde are also applicable to ZEET entities.

The ZEET regime entered into force on 13 May 2022. It is effective until 2030.

^{© 2022 PwC. This communication is of an informative nature and intended for general purposes only. It does not address any particular person or entity nor does it relate to any specific situation or circumstance. PricewaterhouseCoopers Tax Services TLS, Lda. We will not accept any responsibility arising from reliance on information hereby transmitted, which is not intended to be a substitute for specific professional business advice.}