Worldwide Corporate Tax Guide 2021
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Cape Verde ey.com/GlobalTaxGuides
Please direct all inquiries regarding Cape Verde to António Neves of the Lisbon, Portugal, office. Lisbon, Portugal EY Edificio Republica Avenida da Republica, 90 3rd Floor 1649-024 Lisbon Portugal
GMT +351 217-912-000 Fax: +351 217-957-592 +351 217-957-587
Principal Tax Contact António Neves
+351 217-912-249 Mobile: +351 937-912-249 Email: antonio.neves@pt.ey.com
At the time of writing, it is expected that Cape Verde will introduce changes to its tax law in the upcoming months. Because of these expected changes, readers should obtain updated information before engaging in transactions.
A. At a glance Corporate Income Tax Rate (%) Capital Gains Tax Rate (%) Branch Tax Rate (%) Withholding Tax (%) Dividends Paid to Residents Paid to Nonresidents Interest Shareholders’ Loans Resident Shareholders Nonresident Shareholders Private and Public Company Bonds Paid to Residents Paid to Nonresidents Bank Deposits Paid to Residents Paid to Nonresidents Royalties Paid to Residents Paid to Nonresidents Payments for Services and Commissions Paid to Residents Paid to Nonresidents Rental Income Paid to Residents Paid to Nonresidents Branch Remittance Tax
22 (a) 1/20/22 (b) 22 (a) 0/20 (d) 0/10 (c)(d) 20 (e)(f) 20 (c) 10 (e)(f) 10 (c) 10 (e) 20 (c) 20 (e) 20 (c) 0 15 (g) 0 10 (e) 0
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Net Operating Losses (Years) Carryback Carryforward
0 7 (h)
(a) Corporate income tax (Imposto sobre o Rendimento das Pessoas Colectivas, or IRPC) applies to resident companies and nonresident companies with permanent establishments (PEs) in Cape Verde. Micro- and small-sized companies can benefit from a 4% reduced rate, which is applied to their turnover. See Section B for details of other rates. (b) Depending on the situation, a 1% withholding tax is imposed on the consideration or a 20% tax is imposed on the capital gain, provided that the taxpayer is subject to the small-sized companies simplified regime. Also, see Section B. (c) These rates may be reduced or eliminated by tax treaties. (d) The 0% rate applies to dividends distributed by companies subject to and not exempt from IRPC. (e) Income must be declared and is subject to the normal tax rates. Amounts withheld may be credited against IRPC due. See Section B. (f) A withholding tax exemption is available regarding interest from shareholder loans and corporate bonds if the shareholder is a pure holding company (sociedade gestora de participações sociais, or SGPS) with voting rights in the subsidiary (this also applies if the participation is held jointly with other entities in which the holding company is dominant). (g) The 15% rate applies to most services and commissions and may be eliminated under a tax treaty. (h) The amount deductible each year is capped at 50% of the taxable profit for the year.
B. Taxes on corporate income and gains Corporate income tax. Corporate income tax (Imposto sobre o Rendimento das Pessoas Colectivas, or IRPC) is levied on resident and nonresident entities.
Resident entities. Companies and other entities, including nonlegal entities, whose principal activity is commercial, industrial or agricultural, are subject to IRPC on worldwide profits, but a foreign tax credit may reduce the amount of IRPC payable (see Foreign tax relief). A 50% IRPC exemption applies to entities exclusively engaged in agricultural and fishing activities. Companies and other entities, including non-legal entities, that do not carry out commercial, industrial or agricultural activities, are generally subject to tax on their worldwide income (for details regarding the calculation of the taxable profit of these entities, see Section C). Nonresident entities. Companies or other entities that operate in Cape Verde through a PE are subject to IRPC on their profits attributable to the PE. Companies or other entities without a PE in Cape Verde are subject to IRPC on their income deemed to be derived in Cape Verde. The transfer of shares in a foreign or Cape Verdean company is subject to tax in Cape Verde if more than 50% of the assets owned by the company being transferred are composed directly or indirectly of immovable property located in Cape Verde. For tax purposes, companies or other entities are considered to have a PE in Cape Verde if they have a fixed installation or a permanent representation in Cape Verde through which they
C A P E V E R D E 301
engage in a commercial, industrial or agricultural activity, including the supply of services. Under rules that generally conform to the Organisation for Economic Co-operation and Development (OECD) model convention, a PE may arise from, among others, the following: • A building site or installation project, including coordination, inspection and supervision activities • The performance of services (including consultancy) that last for more than 183 days • The existence of a dependent agent Double tax treaties may limit the scope of a PE in Cape Verde. Tax rates. For 2021, IRPC is levied at the following rates. Type of enterprise
Companies or other entities with a head office or effective management control in Cape Verde, whose principal activity is commercial, industrial or agricultural Micro- and small-sized companies with a head office or effective management control in Cape Verde Entities other than companies with a head office or effective management control in Cape Verde, whose principal activity is not commercial, industrial or agricultural PEs Nonresident companies or other entities without a head office, effective management control or a PE in Cape Verde Income subject to withholding tax Income not subject to withholding tax
Rate (%)
22 4
22 22
10/20 22
Certain types of income earned by companies in the last category of companies listed above are subject to the following withholding taxes. Type of income
Interest payments Royalties Technical assistance Income from shares (dividends) Income from government bonds Revenues derived from the use of, or the right to use, equipment Other revenues from the application of capital Payments for services rendered or used in Cape Verde
Rate (%)
10/20 20 15 0/10 10 20 20 20
Applicable double tax treaties may reduce the above withholding tax rates. A fire brigade surcharge (imposto de incêndio) is imposed on resident companies and nonresident companies with a PE in the municipalities of Mindelo (Island of São Vicente) and Praia (Island of Santiago). The fire brigade surcharge is applied at a rate of 2% to the taxable profit determined for IRPC purposes.
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Companies licensed under the Cape Verdean International Business Centre (IBC) regime benefit from a reduced rate of IRPC. This tax benefit applies until 2030 and depends on the creation of a minimum of 10 jobs at the International Industry Center (CII) and the International Trade Center (CIC). The following are the reduced rates of IRPC: • 5% for entities with 10 or more dependent workers • 3.5% for entities with 20 or more dependent workers • 2.5% for entities with 50 or more dependent workers For companies operating in the International Services Center, the IRPC rate is 2.5% if the entity has at least four dependent workers. The shareholders of the companies that are licensed under the IBC regime may benefit from exemptions on dividends received and on interest derived from shareholder loans. Customs duties exemptions may also be available to entities licensed under the IBC regime. A tonnage tax applies to entities licensed in the IBC that develop activities related to the international maritime transport of cargo and passengers, provided that the following conditions are met: • All the ships and similar vessels owned by the taxpayer are registered in Cape Verde’s International Register of Ships, and the total activity developed falls within the scope of this regime. • At least 85% of the income results from activities with other entities installed and functioning in the IBC or with foreign entities. The tonnage tax profit is calculated using a notional daily profit per ship based on a sliding tariff by reference to the net tonnage of the ship. The following table shows the amounts of daily taxable income. Net tonnage
Up to 1,000 From 1,001 to 10,000 From 10,001 to 25,000 Greater than 25,000
Daily taxable income for each 100 net tonnes (CVE)
646 566 307 103
Significant incentives are also available for qualifying investment projects under the Investment Law. Qualifying projects may enjoy the following tax benefits: • A tax credit equal to 30% of relevant investments made in the health sector, the environmental sector, creative industries, tourism or tourism promotion industry and tourism property development, air and sea transportation services and port and airport services, renewable energy production, manufacturing and installation of renewable energy equipment, scientific research and investigation, and information and communication technology development • A tax credit equal to 20% of relevant investments made in other areas • An exemption from municipal real estate holding tax for buildings used in the project
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• An exemption from property transfer tax for buildings used in the project • An exemption from stamp duty with respect to financing necessary for the investment project • An exemption from customs duties for certain goods and equipment The abovementioned tax credits can be used in the year of investment for up to 50% of the IRPC liability. Any excess can be carried forward for 15 years. Further incentives may be available for investment projects that meet the following conditions: • They have a value exceeding CVE3 billion and create at least 20 jobs (CVE1.5 billion and 10 jobs in the case of investments located in a municipal area whose average gross domestic product [GDP] per capita is lower than the national average, with reference to the last three years). • They are relevant for the promotion and acceleration of the development of the Cape Verdean economy. • The promoter of the investment possesses technical and managerial capacities. The exemptions granted cannot exceed five years. Certain customs duties incentives are also available for fishing and industry activities, as well as for, among others, transportation activities and social communication activities. In addition, tax benefits (IRPC, stamp duty and property transfer tax exemptions) are also available with respect to recovery and insolvency processes. To promote the regular registration of immovable property in Cape Verde, significant stamp duty and real estate tax exemptions have been introduced. In 2021, certain tax benefits applicable to startups were introduced, notably a reduction of IRPC, and customs duties, VAT and stamp duty exemptions, which are subject to the fulfillment of some conditions. Limitation of benefits. The amount of tax payable cannot be lower
than 90% of the amount that would be assessed if the taxpayer did not benefit from certain tax incentives and deduction of tax losses carried forward.
Notional interest deduction. Companies can benefit for a six-year
period from a notional interest deduction of 10% on the amount of cash contributions or conversions of loans by shareholders to share capital that occur on or after 1 January 2018. The amount to which the notional interest deduction applies is capped at CVE100 million. The deemed interest deduction is considered for the net financial expenses limitation (see Debt-to-equity rules in Section E).
Simplified regime of taxation. Micro- and small-sized resident companies that have annual turnover not exceeding CVE10 million or no more than 10 employees and that meet certain other conditions may opt to be taxed under a simplified regime of
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taxation. Companies under the simplified regime of taxation are subject to a rate of 4% levied on the turnover. Capital gains. Capital gains derived from the sale of investment
properties, tangible fixed assets, intangible assets, noncurrent assets held for sale and financial assets are included in taxable income subject to IRPC. The capital gain equals the difference between the sales value, net of expenses incurred on the sale, and the acquisition value, adjusted by depreciation, impairment relevant for tax purposes and an official index. Fifty percent of the capital gains derived from disposals of certain assets held for more than one year may be exempt if the sales proceeds are invested in tangible fixed assets, intangible assets, investment property and shares during the period beginning one year before the year of the disposal and ending two years after the year of the disposal. A statement of the intention to reinvest the gain must be included in the annual tax return for the year of disposal. The remaining 50% of the net gain derived from the disposal is subject to tax in the year of the disposal. If only a portion of the proceeds is reinvested, the exemption is reduced proportionally. If, by the end of the second year following the disposal no reinvestment is made, the net capital gain that remains untaxed (50%) is added to taxable profit for that year, increased by 15% and compensatory interest applies. A similar adjustment occurs if the assets in which reinvestment is made are not maintained by the taxpayer for at least two years from yearend of the tax period in which the reinvestment is made. Losses from the transfer for consideration of shareholdings in tax-haven entities are not allowed as deductions. Losses resulting from shares are also not deductible if the seller has resulted from a transformation, including a change of the business purpose, of an entity for which such losses would not be deductible and if less than three years have elapsed since the date of transformation. There is also an exclusion from taxable income for capital gains (or losses) realized by resident entities and nonresident entities with a PE in Cape Verde that are derived from the disposal of shares (and other equity instruments), provided the shares have been held for a period of at least 12 months. Such exclusion does not apply to capital gains realized on the transfer of shares acquired from entities domiciled or with a place of effective management in a territory subject to a more favorable tax regime. In addition, the exclusion cannot be applicable if real estate located in Cape Verde accounts for directly or indirectly more than 50% of the assets of the entity whose shares are being transferred. In addition, an exemption is available for gains realized by nonresident entities without a PE in Cape Verde on the disposal of shares and other securities. Nonresident companies that do not have a head office, effective management control or a PE in Cape Verde are taxed at a 1% rate on the sales proceeds derived from disposals of real estate, shares and intellectual property. In general, the tax due is paid through withholding tax. Certain gains may be taxed at a 22% rate and require filing of a tax return.
C A P E V E R D E 305 Administration. The tax year is the calendar year.
All companies engaging in activities in Cape Verde must register with the tax department to obtain a taxpayer number. Companies, including foreign companies with a PE in Cape Verde and foreign companies without a PE that had not been subject to withholding tax, must file an annual tax return, together with their financial statements and other documentation, by 31 May in the year following the tax year. Companies with a head office, effective management control or a PE in Cape Verde must make advance payments of IRPC. Companies whose principal activity is commercial, industrial, agricultural or fishing must make payments in March, August and November of the current tax year. The tax base for the payments is 30%, 30% and 20%, respectively, of the preceding year’s tax liability. The tax rate of 22% is applied to this tax base to compute the amount of the advance payment. Companies with a head office, effective management control or a PE in Cape Verde that have adopted a financial year other than the calendar year must make estimated payments as outlined above, but in the 3rd, 7th and 11th months of their financial year. They must file a tax return by the end of the fifth month following the end of that year. Companies under the simplified regime of taxation must make advance payments at the end of April, at the end of July, at the end of October and at the end of January of the following year. The IRPC rate of 4% is applied to the preceding quarter’s turnover. If the total amount of the advance payments exceeds the tax due for the tax year, the excess may be carried forward as a tax credit against the tax payable in the following four years or refunded on the occurrence of certain events. A nonresident company without a PE in Portugal must appoint an individual or company, resident in Cape Verde, to represent it with respect to its tax liabilities. Penalties are imposed for the failure to file tax returns and satisfy other compliance obligations. If, on the final assessment, the tax authorities determine that a further payment is required and that the taxpayer is at fault, interest is imposed on the amount of the additional payment. Fines, which are generally based on the amount of tax due, are also imposed. If the tax due is not paid, additional interest is imposed from the date of the tax authorities’ notice that an additional payment is due. Binding rulings. The General Tax Code provides the taxpayer the possibility of obtaining a binding ruling. The biding ruling is limited to a certain time period, which is determined on a case-bycase basis by the tax authorities. The ruling is subject to the payment of a fee. Dividends. Dividends paid by companies to residents and non-
residents are generally subject to withholding tax at rates of 20% and 10%, respectively.
On distributions to resident parent companies, the 20% withholding tax is treated as a payment on account of the final IRPC due.
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The 20% rate applies, as a general rule, if dividends are distributed to entities resident in Cape Verde. If the entity distributing the dividends is subject to and not exempt from IRPC, a 0% rate applies. The 10% rate is exclusively applicable to dividends paid to nonresident entities. Likewise, a 0% rate applies if the distributing entity (resident in Cape Verde) is subject to and not exempt from IRPC. A resident company or a nonresident company with a PE subject to and not exempt from IRPC may deduct 100% of dividends received from another resident company. The above regime also applies, under similar conditions, to dividends distributed by foreign affiliates if the underlying profits have been subject to and not exempt from income tax. If the recipient benefits from a reduced IRPC rate, the recipient may deduct only 50% of the dividends. If a recipient qualifies for the 100% deduction, the payer of the dividends does not need to withhold tax. A withholding tax exemption applies to dividends distributed to nonresident companies if the requirements described above are met. Positive liquidation proceeds are treated as deemed dividends in the portion corresponding to the difference between the liquidation proceeds attributed and the associated capital contributions. Any excess is treated as a capital gain. If the amount is negative, it is treated as a capital loss. Losses from the liquidation of subsidiaries are deductible only if the shares have been held for at least three years. Foreign tax relief. Foreign-source income is taxable in Cape Verde. However, direct foreign tax may be credited against the Cape Verdean tax liability, limited to the lower of the following amounts: • The amount of tax incurred in the foreign country • The amount of IRPC attributable to the foreign-source income
If an applicable double tax treaty reduces the withholding tax rates, the tax credit is limited by the applicable treaty clause. The foreign tax credit cannot be carried forward.
C. Determination of trading income General. Taxable profit is determined according to the following
rules: • For companies with a head office or effective management control in Cape Verde that are principally engaged in commercial, agricultural or industrial activities, the taxable profit is the net accounting profit calculated in accordance with Cape Verdean generally accepted accounting principles, as adjusted by the IRPC Code. • For companies with a head office or effective management control in Cape Verde that do not principally engage in commercial, industrial or agricultural activities, the taxable profit is the net total of revenues from various categories of income described in the Personal Tax (Imposto sobre o Rendimento das Pessoas Singulares, or IRPS) Code, less expenses.
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• For PEs, the taxable profit is determined as outlined in the first bullet above. In calculating taxable profit, general administrative expenses that are attributable to the PE may be deducted as a cost if justified and acceptable to the tax authorities. Expenses that are considered essential for the generation or maintenance of profits are deductible. However, certain expenses are not deductible for IRPC purposes including, but not limited to, the following: • Illicit expenses • Depreciation and amortization claimed that exceed the rates fixed in the Cape Verdean tax law • Provisions and impairments (except for those contained in the Cape Verdean tax law) • IRPC, stand-alone taxes and surcharges • Penalties and interest charges • Improperly documented expenses • Health or personal injury insurance premiums, and expenses or losses with respect to life insurance, contributions to pension funds or supplementary social security systems, except when they are taxed under the IPRS Code or when they are mandatory by law or contracts • Real estate taxes (except for companies engaged in real estate trading activities) • Expenses concerning pleasure boats and tourism airplanes, except for those allocated to public transportation companies or used for rental purposes as part of the company’s normal activities Assets under financial leases are deemed to be owned by the lessee. Consequently, the lessee may deduct only applicable tax depreciation and any interest included in the rent payments. Special rules apply to sale-and-leaseback transactions. Thirty percent of expenses related to passenger or mixed-use vehicles, except when these vehicles are allocated to public service, which are depreciation, rent, insurance, repairs and fuel, and 50% of representation expenses, are not deductible for tax purposes. Although representation expenses and expenses related to private cars are deductible with some limits, they are subject to a special stand-alone tax at a rate of 10% (this stand-alone tax may not apply in certain cases). A 10% stand-alone tax rate also applies to tax-deductible daily allowances and compensation for costs incurred by employees when traveling in their own vehicles at the service of the employer if these amounts are not charged to clients and not subject to IRPS. Undocumented expenses are not deductible. In addition, these expenses are subject to a special stand-alone tax rate of 40%. A stand-alone tax at a rate of 10% also applies to certain fringe benefits attributed to the employer (if the amount exceeds CVE15,000), which are gifts made to employees, sales of vehicles to employees below market value, travel expenses paid to employees if not related to the company’s activities and interest-free or low-interest-rate loans to employees.
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The above stand-alone taxes are imposed regardless of whether the company earns a taxable profit or suffers a tax loss in the year in which it incurs the expenses. In addition, all stand-alone tax rates are increased by 10 percentage points if the taxpayer benefits from a privileged tax regime or incurs a tax loss in two consecutive years (with some exceptions). Inventories. Inventories must be consistently valued by any of the
following criteria: • Effective cost of acquisition or production • Standard costs in accordance with adequate technical and accounting principles • Cost of sales less the normal profit margin • Cost of sales of products cropped from biological assets, which is determined at the time of cropping, less the estimated costs at the point of sale, excluding transportation and other costs required to place the products in the market Changes in the method of valuation must be justifiable and acceptable to the tax authorities. Provisions. The following provisions, among others, are deduct-
ible: • Bad and doubtful debts, based on a judicial claim or on an analysis of the accounts receivable • Inventory losses (inventory values in excess of market value) • Technical provisions imposed on insurance companies and financial institutions by the competent Cape Verdean regulatory authorities Depreciation. In general, depreciation is calculated using the straight-line method. The declining-balance method may be used for new tangible fixed assets other than buildings, office furniture and automobiles not used for public transport or rental. Maximum depreciation rates are established by law. If rates that are less than 50% of the official rates are used, total depreciation will not be achieved over the life of the asset. The following are the principal official straight-line rates. Asset
Commercial buildings Industrial buildings Office equipment Motor vehicles Plant and machinery
Rate (%)
3 5 12.5 to 33.33 12.5 to 20 16.66 to 20
Companies may request the prior approval of the tax authorities for the use of depreciation methods other than straight-line, declining-balance or rates increased up to 50%. Approval is granted only if the request is justified by the company’s business activities. Relief for losses. Tax losses may be carried forward for seven years. The amount deductible each year is capped at 50% of the taxable profit for the year. Loss carrybacks are not allowed.
Companies under the simplified tax regime cannot benefit from the relief for losses. Tax loss carryforwards are forfeited if the taxpayer states a zero annual turnover and does not obtain any income from its normal business activity for two consecutive tax years.
C A P E V E R D E 309 Groups of companies. The Cape Verdean Tax Law does not pro-
vide a special tax regime for groups of companies.
D. Other significant taxes The following table summarizes other significant taxes. Nature of tax
Value-added tax; levied on goods and services, other than exempt services Excise duties General rate Other rates Social security contributions; on salaries; paid by Employer Employee Self-employed workers Property transfer tax; payable by purchaser Municipal real estate holding tax; local tax; imposed annually on the assessed tax value of the property on 31 December; tax payable by the owner of the property Stamp duty Credit operations Interest on bank loans and bank services Guarantees Insurance premiums Bills of exchange, promissory notes and other negotiable debt securities Notarial acts of registrations and procedures Administrative acts and contracts Touristic contribution; for every overnight stay in a touristic establishment, up to a maximum of 10 nights; children under 16 years old are not subject to this contribution
Rate
15% 10% 0% to 50% 16% 8.5% 11%/19.5% 1.5%
1.5% 0.5% 3.5% 0.5% 3.5% 0.5% 15% CVE1,000
CVE220 per night
Ecologic charge; imposed on some products imported or produced domestically that are non-biodegradable or made out of metal, glass or plastic; charge varies depending on the quantity or weight of the goods; payable by the local producer or importer; exemptions are available, including packing material used in medicine or for packing essential food, such as corn, rice, sugar, flour and milk CVE2 to CVE200 per kilogram
E. Foreign-exchange controls Foreign-exchange controls. The currency in Cape Verde is the
escudo (CVE).
Cape Verde imposes foreign-exchange controls in certain situations. Mergers and reorganizations. Mergers and other type of corporate reorganizations may be tax neutral in Cape Verde if certain conditions are met.
310 C A P E V E R D E Controlled foreign entities. A Cape Verdean resident owning, di-
rectly or indirectly, at least 25% in the capital, voting rights or rights to income or estate of a controlled foreign entity (CFE) is subject to tax on its allocable share of the CFE’s net profit or income. For computing the 25% threshold, the capital and rights owned, directly or indirectly, by related parties are also considered. Several rules, which are based on the nature of the activity and whether the activity is predominantly directed to the Cape Verdean market, may result in the non-imputation of profits or income. Payments by residents to nonresidents subject to a more favorable tax regime. In general, payments made by Cape Verdean residents
to nonresidents subject to a more favorable tax regime as provided by the General Tax Code are not deductible for tax purposes, and the payers are subject to a stand-alone tax rate of 60%. However, these payments may be deducted and are not subject to standalone taxation if the payer establishes the following: • The payments were made in real transactions. • The payments are normal. • The amounts of the payments are not unreasonable. Related-party transactions. For related-party transactions (transactions between parties with a special relationship), the tax authorities may make adjustments to taxable profit that are necessary to reflect transactions on an arm’s-length basis.
A special relationship is deemed to exist if one entity has the capacity, directly or indirectly, to influence in a decisive manner the management decisions of another entity. This capacity is deemed to exist in the following relationships: • Between one entity and its shareholders, or their spouses, ascendants or descendants, if they possess, directly or indirectly, 20% of the capital or voting rights of the entity • Between two entities in which the same shareholders, their spouses, ascendants or descendants hold, directly or indirectly, a participation of not less than 20% of the capital or voting rights • Between any entities bound by dominance relations • Between a nonresident entity and its Cape Verdean PE • Between a resident entity and an entity located in territory with a favorable tax regime according to the General Tax Code Foreign PE profits. Transactions between the head office and a foreign PE must respect the arm’s-length principle. Debt-to-equity rules. A limitation to the deduction of interest
expenses (net of interest revenues) applies. The tax deduction for net financial expenses is capped by the higher of the following amounts: • CVE110 million • 30% of the earnings before interest, taxes, depreciation and amortization The nondeductible excess, as well as the unused fraction of the 30% threshold, may be carried forward to the following seven years.
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F. Treaty withholding tax rates Dividends %
Macau SAR Mauritius Portugal Spain Non-treaty jurisdictions
10 0/5 (a) 10 0/10 (d) 0/10
Interest %
10 0/10 (b) 0/10 (c) 0/5 (e) 10/20
Royalties %
10 7.5 10 5 20
(a) The 5% rate applies if the beneficial owner of the dividends is a resident of a contracting state and owns directly less than 25% of the capital stock of the company paying the dividends. (b) The 0% rate applies if the debtor or payee is the government of a contracting state, a political or administrative subdivision, a local authority or a statutory body thereof, or if the interest is paid to an institution (including a financial institution) in connection with any financing granted by it under an agreement between the governments of the contracting states. (c) The 0% rate applies to interest paid by the government of one contracting state or derived by the government of the other contracting state. (d) The 0% rate applies if the beneficial owner of the dividends is a company (other than a partnership) that holds directly at least 25% of the capital of the company paying the dividends. (e) The 0% rate applies if any of the following circumstances exist: • The beneficial owner is the state or the central bank, or a political subdivision or local authority or statutory body. • The interest is paid by the state in which the interest arises or by a political subdivision or local authority or statutory body thereof. • The interest is paid with respect to a loan or credit owed to, or granted, made, guaranteed or insured by, the state or a political subdivision, local authority or export financing agency thereof. • The beneficial owner is a financial institution. • The interest is paid in connection with the sale on credit of equipment, goods or merchandise, or services. • The beneficial owner is a pension fund and the income of the fund is exempt from tax.
Cape Verde has also signed double tax treaties with Angola, Equatorial Guinea and Guinea-Bissau, but these treaties are not yet in force.