Cape Verde Law Firm | Carla Monteiro & Associados - Tax Incentive Regime in Research and Business Development

Carla Monteiro

Friday, 29 Sep 2023

Tax Incentive Regime in Research and Business Development

Law No. 16/X/2023 of December 13, which approves the state budget for the current economic year, provides for the regime of tax incentives in business research and development (hereinafter RIFIDE), a tax benefit that aims to reinforce the fiscal competitiveness of companies, via the promotion of research and development activities through the deduction of a percentage of the expenses incurred in these activities from the collection of corporate income tax (IRPC).

Incorporated into this deduction regime are income tax payers (IRPC) residing in Cape Verde who carry out, primarily, an activity of a commercial, agricultural, industrial and service nature, and non-residents with an establishment stable in that territory from which they can deduct the amount of the IRPC collective date calculated in accordance with paragraph 3 of article 90 of the IRPC code and up to its competition and development in the part that has not been the subject of financial contribution from the state in a double percentage to that The diploma calls it the base rate and the incremental rate, and for investment projects carried out by taxpayers who are exclusively dedicated to development research activities, they benefit from some tax exemptions.

Therefore, Ordinance No. 39/2023 of September 5th provides that for the purposes of the regime established in the state budget law and which approves RIFIDE, it determines that when, in the year in which the benefit begins to be enjoyed, there is a change in the tax period, the annual period beginning in that year.

Cape Verde Law Firm | Carla Monteiro & Associados - Tax Incentive Regime in Research and Business Development

For the purposes of RIFIDE, for example, acquisitions of tangible fixed assets, the execution of buildings and land are considered deductible, as long as they are created or acquired in a new state and in proportion to their allocation to carrying out research and development activities.

This entire process will be carried out with ARES (higher education regulatory agency) for the purposes of recognizing the entity’s suitability in terms of research and development and with the issuance of the respective declaration, as well as with the DNRE regarding the tax documentation process.

Therefore, the benefits established by this regime cannot be combined with any other benefits, provided for in this or other legal documents.

The tax incentive regime for research and business development is in force from 2023 to 2028.

Ordinance nº39/2023 of September 5th is now in force.

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