Country Report Cape Verde

Economic overview

Financial combination decreased the monetary shortage to an expected 2.4% in 2018 from 3.1% in 2017, and the shortfall is anticipated to keep on narrowing step by step, to 1.9% in 2019. Be that as it may, open obligation has been over a reasonable edge—126% of GDP in 2017. 

The Banco de Cabo Verde’s cut its arrangement rate by 200 premise focuses to 1.5% in June 2017, inciting a decrease in business banks’ normal loaning financing cost from 6.5% to 4.5% toward the finish of 2018. Therefore, credit to the economy extended by 7.5%.

Customer cost record expansion stays low, ascending to 1% in 2018 from 0.8% in 2017 because of expected cost increments in nourishment and vitality items.

Remote stores spread about 5.9 long stretches of imports of products and ventures and stay sufficient to keep up the one-sided swapping scale peg to the euro. 

The present record shortage extended from 7.6% in 2017 to 8.5% in 2018 as all out import development outpaced send out incomes (specifically those from the travel industry) in the midst of declining settlements. Aside from the travel industry, the country’s fundamental fares are fisheries and made merchandise (apparel and footwear). The fundamental imports are fuel, gear, hardware, and customer products, for the most part from Spain and Portugal, the nation’s biggest exchanging accomplices. 

The economy is relied upon to keep up genuine GDP development, anticipated at 4.1% in 2019 and 4.8% in 2020. Development is relied upon to be driven by settlement inflows, producing, proceeded with development in the travel industry, and expanded open framework spending. Private speculation bolstered by good residential credit conditions will likewise add to financial development.

Main sectors in Cape Verde

The travel industry 

The travel industry area is one of the most significant in the economy. The country respects an expected a large portion of a million guests consistently. The tourists rush to the country to encounter the unending African Sunshine and the untainted white sandy shorelines.

The travel industry and travel industry straightforwardly represented 17.8% of the countries GDP in 2017. The fundamental elements in the business are inns, eateries, and trip specialists. The area is relied upon to observe a yearly development rate of about 5.4 % by 2028. 

Manufacturing

The assembling business in the nation is contained for the most part of little scale ventures which incorporate sewing, earthenware production, materials, pharmaceuticals, and refreshments. Fish canning combined with the preparing of solidified lobsters is additionally done in Cabo Verde. 

Agriculture, Fishing, and Forestry 

The farming division in the nation is restricted by the repetitive and serious dry spells that happen on the islands. A portion of the yields developed for residential utilization incorporate castor beans, maize, potatoes, sugar stick, and peanuts.

The country’s angling division is as yet not completely exploited. The primary species are lobster and fish. The ranger service division is influenced by kindling gathering which puts generous strain on the country’s forest assets. The utilization of the firewood has been on the rise lately, however the administration’s reforestation task endeavors to alleviate the unfavorable impacts of kindling reaping. 

Finance and Banking

Escudo is the country’s currency and is issued by the Banco de Cabo Verde (central bank). There are a few remote banks in the country just as a stock trade. The legislature privatized a few protection and banking organizations in the late 1990s. 

Telecommunications and Transportation

The vast majority of the streets in the nation are cleared, and all the occupied islands have air terminals. Universal flights to a few goals, for example, Brazil, Boston, Rome, Lisbon, Paris, and different goals in West Africa are conceivable. The island country likewise has ship administrations. The nation likewise has a national carrier and transportation line. Cabo Verde has great telephone utility, and the utilization of Cellular phone is likewise growing. 

Mining, Construction, and Energy 

Cabo Verde has constrained common assets. The country’s mineral prerequisites are met through imports. Be that as it may, there is residential generation of gypsum, mud, pozzolana, and limestone. Salt is additionally mined on the islands of Sal, Maio, and Boa Vista. 

The country’s oil industry is reliant on refined oil based goods imported from territory Africa and Portugal. The administration goes for diminishing the dependence on imported petroleum products by putting resources into inexhaustible wellsprings of vitality. 

The legislature has so far built breeze cultivates on a few islands with a limit of 28 megawatts just as sun oriented vitality ranch on the island of Sao Tiago which has a generation limit of 5 megawatts and another on Sal with a limit of 2.5 megawatts.

Taxation in Cape Verde

CIT payers can be taxed under two regimes:

  • Special regime for micro and small-sized companies:
    • Micro-sized company: An entity that employs up to five persons with an annual turnover (gross amount of sales and services) that does not exceed CVE 5 million.
    • Small-sized company: An entity that employs between six and ten persons with an annual turnover (gross amount of sales and services) of between CVE 5 million and CVE 10 million.
    • Micro and small importers: Importers whose customs value of imported goods does not exceed the value of turnover on an annual basis for the purpose of qualifying under the simplified scheme for micro and small-sized companies.
  • Standard organised accounting regime (standard/normal regime under which the computation of profits follows the local accounting rules).

Income tax rates

Resident companies are subject to a tax rate of 22%, where taxable income corresponds to the profit less any tax benefits and any losses carried forward, as stated in the tax return. The tax rate of 22% is also applicable for PEs of non-resident companies.

Micro and small-sized companies are subject to a single special tax (SST) of 4% levied on the gross amount of sales obtained in each taxable year, to be paid quarterly. The SST replaces the CIT, fire brigade surtax, and VAT, as well as the contribution to social security attributable to the company.

Non-resident companies without a PE are subject to WHT rates applicable for each income category foreseen in the Tax Code, which range between 1% and 20%.

Surcharge

The CIT rate is increased by a fire brigade surcharge, called Taxa de Incêndio, of 2% on the tax due, leading to a final tax rate of 22.44%. 

Reasons to invest in Cape Verde

  • The Tourism & Real Estate Sector is predicted to grow at an average rate of approximately 25% in the next five years to ten years.
  • B+ Fitch Ratings evaluation of Cape Verde market stability in terms of long term foreign currency risk (Cape Verde Escudos is pegged to the Euro);
  • Attractive fiscal incentives including zero corporation tax for five years on profits and dividends and half rate (15%) for the next five years. See Fiscal Incentives.
  • Listed by Irish and British International Consultants as one of the Worlds Top 20 Hot Spots to invest in 2005 and 2006 (2005 was placed in 12th; in 2006 was placed in 3rd);
  • Privileged Geographical Location:
  • Midway between North America and Southern Africa;
  • Halfway between South America and Central Europe;
  • Regular International flights from all major International cities (Amsterdam, London, Manchester, Stockholm, Copenhagen, Prague, Milan, Madrid, Lisbon, Munich, Rome, Paris, Boston, Frankfurt, Las Palmas, Fortaleza – Brazil).