São Tomé and Príncipe: sharp concentration
SÃ£o TomÃ© and PrÃncipe is strategically located in the Gulf of Guinea region, close to and with easy access to the West African market. The government of SÃ£o TomÃ© and PrÃncipe strives to achieve sustainable economic development for the country, adopting policies to develop the free trade area and the movement of people, goods and services and to resolve the associated restrictions. to non-trade barriers. SÃ£o TomÃ© and PrÃncipe is entering a new era in its development, benefiting from its natural, human and financial resources as well as its political stability.
Foreign investment plays an important role in this process and is vital for the economic growth and development of SÃ£o TomÃ© and PrÃncipe.
There are several potential sectors for investment, including agriculture, livestock, industry, fisheries, infrastructure, services and energy.
To stimulate and develop the private sector, SÃ£o TomÃ© and PrÃncipe approved a set of legislative measures that create favorable conditions for foreign investment and improve the business environment of the country. One of the key legislative texts of this package to attract foreign investment was the implementation of a new Investment Code of SÃ£o TomÃ© and PrÃncipe (Decree-Law 19/2016 of November 17, 2016) and the creation of a one-stop-shop (Decree-Law 37/2009 of 13 October) for the incorporation of companies. There are also other important new laws relating to the protection of industrial property rights, tax benefits, foreign exchange and labor relations.
SÃ£o TomÃ© and PrÃncipe’s private investment policy is based on several general principles. These include respect for private property, free market rules and healthy competition between economic agents and free initiative, except in areas defined by law as being reserved for the State. The policy guarantees security and protects investments, guarantees equal treatment between domestic and foreign investors and guarantees the promotion of the free movement of goods and capital, in accordance with the law. It also undertakes to respect and fully comply with international agreements and treaties.
As a rule, SÃ£o TomÃ© and PrÃncipe allows the freedom of private investment, without it being subject to any authorization or approval of the authorities. However, for investments in economic activities that can contribute to the development of SÃ£o TomÃ© and PrÃncipe and with a minimum value of â¬ 50,000, the investor and the State can conclude an Administrative Investment Contract, regulated by the Code of Investments of SÃ£o TomÃ© and PrÃncipe (Investment Code), which establishes the terms, conditions, forms, guarantees and incentives applicable to investments made in the country.
The types of investments that will be subject to the Investment Code are broadly defined and may consist of several different activities. They include the transfer of financial resources from abroad or the use of own funds, and the use of foreign currency held in bank accounts in SÃ£o TomÃ© and PrÃncipe; import of machinery, equipment, accessories and other physical assets; the application of credits and other funds from private investors to finance entrepreneurial activities; the application of technology and know-how; the creation of new companies owned exclusively by the private investor; the development of real estate projects, tourist or not, whatever their legal nature; and corporate finance, etc. These investments will also be eligible for incentives under the tax benefits code.
The Investment Code proposes three investment regimes:
- Simplified scheme – for investments with a value between â¬ 50,000 and â¬ 249,999
- General scheme – for investments with a value between â¬ 250,000 and up to â¬ 5 million not included
- Special regime – for investments worth 5 million euros or more
The value of the investment determines the types of tax incentives and benefits offered to investors.
Private investment projects are subject to an investment agreement (Administrative Investment Contract) by which investors benefit from a unique package of advantages, among which: investment protection, in particular by matters of expropriation; a guaranteed right to expatriate the proceeds of investments abroad, such as royalties, profits and dividends; the right to import goods directly from abroad and to export manufactured products; a guarantee of non-interference by the State in the management of private companies; the possibility of making the land necessary for the development of a project available; and the aforementioned possibility of tax and customs advantages.
The tax advantages code (Decree-Law 15/2016 of November 17, 2016) grants investors general and specific advantages and incentives. Some incentives are granted automatically while others depend on the continued action of the investor and the recognition of the authorities.
General incentives include:
- An exemption from import duties for goods and equipment used for new activities or the expansion of existing activities (provided that the goods and equipment concerned cannot come from SÃ£o TomÃ© and PrÃncipe).
- A corporate tax rate of 10%.
- Depreciation and accelerated depreciation for investments in the sectors of tourism, education, health, new technologies and export (it consists in applying the double of the normal rates, legally fixed for the calculation of depreciation considered as costs attributable to the fiscal year for the determination of the income).
- Tax deductions for investment in specialized equipment for the development of activities authorized by the Investment Code during the first five years of activity.
- Tax deductions for training costs for SÃ£o TomÃ© and PrÃncipe personnel.
- Tax deductions for the first five years of activity for costs relating to the construction and rehabilitation of roads, water supply, electricity, energy, schools, hospitals and other works public. These deductions amount to 150%, if the activities are located in the districts of Cantagalo, LembÃ¡, Lobata, CauÃ© or in PrÃncipe; and 100%, if the activities are in the other districts.
- Exemption from stamp duty for five years in the event of modification of the articles of association.
- Exemption from the SISA tax on the acquisition of real estate.
In addition to general incentives, there are also special tax incentives for investments in agriculture, agro-industry, livestock and fisheries. These include in particular an exemption from import duties on goods and equipment; a 50% reduction in the corporate tax rate during the first seven years of project implementation; and a 0.2% stamp duty on banking operations related to the importation of foreign capital.
The hospitality sector may also benefit from special incentives, which target the catering, construction, expansion or modernization of hotels and related establishments and the development of rural tourism and ecotourism. Companies involved in international trade benefit from specific advantageous tax treatment and are subject to a flat tax rate of 5%.
In addition, the Tax Benefits Code provides that additional incentives are available for high value projects exceeding $ 10 million.
Of all these legislative developments, one of the most relevant measures implemented in SÃ£o TomÃ© and PrÃncipe is the creation of the one-stop-shop for the incorporation of companies, which simplifies the procedure of incorporation and registration of a company. The Single Window provides investors with the different legal forms of companies that can operate in SÃ£o TomÃ© and PrÃncipe and that can serve as investment vehicles, such as the limited liability company (SA) and the private (and one-person) company. ) limited liability company.
SÃ£o TomÃ© and PrÃncipe now has the minimum legal and institutional measures to welcome all investors wishing to do business in this single market, taking advantage of both its strategic location and its natural resources.
Joana Andrade Correia
Phone. : +351 21 3121330
Joana Andrade Correia co-headed the Corporate and M&A department of Raposo Bernardo for 18 years. She has led numerous national and international operations, including corporate restructurings and M&A transactions for key players in different sectors such as banking and finance, aviation, tourism and energy, between others.
His recent work includes advising Icelandair Airlines on the privatization of the national airline of Cape Verde; Iberostar Hotels and Resorts Group in connection with its incorporation in Portugal and the opening of two hotels; Deutsche Bank in the negotiation and preparation of a bank financing agreement relating to the acquisition of commercial aircraft; Development Bank of China and Africa on the financing of investments in infrastructure and construction projects; Afreximbank on the financing of the construction of a Hilton hotel; and Elix Capital on transactions involving airlines and aircraft leasing companies, acquisitions and leveraged finance.
Julio Martins Junior
Phone: + 351 21 3121330
JÃºlio Martins JÃºnior is a member of the Cape Verdean and Portuguese bars.
JÃºlio has 15 years of experience in corporate law and finance-related transactions, particularly in relation to sales and acquisitions of shares and assets, financing transactions, licensing and regulation and Mergers and Acquisitions.
JÃºlio has managed and participated in major international investment projects. His recent transactions include advising over 30 banks operating in the country on financing contracts for major infrastructure and equipment; counsel to the largest private bank in Cape Verde; advising the national aviation company TACV, which remains the largest privatization in the country; assist CV Telecom on a project to build the second submarine cable connecting South Africa, Cape Verde and Portugal; and advising China Construction Bank on a loan agreement for an international credit operation.
He was on the drafting teams of some of the most recent legislative packages for Cape Verde.
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