Cape Verde - VAT Rules for E-Commerce Suppliers

One part of the State Budget Law for 2022 introduced provisions that paved the way for introducing tax liabilities for foreign providers of digital services. These changes, known as the ‘Special VAT regime in electronic commerce’ (Special regime), were further refined in December 2022, marking a crucial and highly relevant development in the taxation of digital services.

This Special regime includes rules regarding the place of supply, taxable event, registration and declaration obligations, applicable rate, payment of tax, and a supplementary regime applicable in case registration is not completed.

Foreign Providers and VAT Liabilities 

The scope of the special VAT regime covers foreign providers of digital services and e-commerce digital platforms. Regarding the types of taxable supplies covered with this reporting system, its scope covers cross-border distance sales of goods and the provision of digital services by non-resident digital sellers.

It is important to remember that the regime does not apply to payments above CVE 10,000 or related to products subject to excise duties. E-commerce operators are required to register for VAT  in a simplified manner, which requests the delivery of the following information:

• Identification of the taxpayer;

• Domicile;

• Tax identification in the country of domicile;

• Area of activity.

Once registered, e-commerce operators should file tax declarations in English and/or Portuguese at the end of each quarter.

Conclusion

The special regime does not distinguish B2C and B2B electronic supplies of goods and services, and rules apply to all those supplies. Although regulations for e-commerce operators have been in place since 2022, the executive decrees and accompanying framework still need to be included. Once an operator is included in the list, it is required to register until the end of June.

Source: Law No. 4/X/2021, Law No. 16/X/2022