If you run a small company in Cabo Verde under the default tax setup, you are juggling three separate obligations: corporate income tax at 20% on your profit, VAT at 15% on your sales with monthly filings, and employer social security at 16% on every salary. Miss one quarterly rhythm and the penalties stack. But if your company is small enough, the law lets you replace all of that with a single payment: 4% of gross sales, paid once a quarter. That is the REMPE simplified regime, and choosing the wrong regime — in either direction — is one of the most expensive mistakes a Cabo Verdean small business can make.
This guide walks through who qualifies, what the 4% covers, the gross-sales catch that makes it a bad deal for low-margin businesses, and how to stay compliant once you are in.
The Two Regimes at a Glance
Cabo Verde taxes companies under one of two methods, and the gap between them is enormous.
Organized accounting regime (the default for larger companies). You compute taxable profit under local accounting rules and pay corporate income tax, known as IRPC, at 20% — reduced from 21% by the 2026 State Budget. On top of that, companies in the municipalities of Praia and Mindelo owe the Taxa de Incêndio fire brigade surcharge of 2% on the tax due, for an effective rate of 20.40%. You also charge 15% VAT, called IVA, on your sales, file monthly IVA returns netting output tax against input credits, keep full organized books, and pay the employer's 16% share of social security to the INPS on every salary.
REMPE simplified regime (for qualifying micro and small companies). You pay the Single Special Tax, or SST, of 4% on gross sales for the year, in quarterly instalments. That one payment replaces the IRPC, the fire brigade surcharge, the IVA, and the company's INPS contribution. No monthly VAT returns, no profit computation, no separate employer social security bill.
| Organized accounting | REMPE simplified | |
|---|---|---|
| Income tax | 20% of profit (20.40% in Praia/Mindelo) | 4% of gross sales, all-in |
| VAT (IVA 15%) | Charge, file monthly, remit net | Replaced by the SST |
| Employer social security (16%) | Due on every salary | Replaced by the SST |
| Books | Full organized accounting | Simplified, but sales records still required |
| Payment rhythm | Annual return plus monthly IVA | Quarterly SST instalments |
For a profitable services business, the savings are dramatic. But notice what the 4% applies to: gross sales, not profit. That single word is the whole decision, and we will do the math below.
Do You Qualify? The Micro and Small Thresholds
REMPE has two doors, defined by headcount and annual turnover measured as the gross amount of sales and services:
- Micro-sized company: up to 5 employees and annual turnover of no more than 5 million escudos (CVE). At the escudo's euro peg of about 110 CVE to the euro, that is roughly 45,000 euros, or about USD 53,000.
- Small-sized company: 6 to 10 employees and annual turnover between CVE 5 million and CVE 10 million — roughly 45,000 to 91,000 euros, or about USD 53,000 to USD 106,000.
Both conditions must hold: stay within the employee band and the turnover band for your category. Grow past either ceiling and you graduate to the organized accounting regime.
There is a special test for importers. A micro or small importer only qualifies if the customs value of its imported goods does not exceed its turnover on an annual basis. This is the tripwire for trading companies: if you import high-value stock and sell it at a thin markup, your customs value can sail past your sales figure and push you out of the regime even though your turnover looks small.
One more boundary worth knowing: the regime is aimed at genuine small operating companies. If your turnover already exceeds CVE 10 million or you employ more than 10 people, REMPE is closed to you and organized accounting is mandatory.
What the 4% Actually Replaces — and What It Does Not
The SST's appeal is consolidation. A single quarterly payment stands in for four separate obligations:
- Corporate income tax (IRPC). No annual profit computation, no 20% on net income.
- The fire brigade surcharge. Praia and Mindelo companies skip the extra 2% on tax due.
- VAT (IVA). You neither charge 15% IVA on your sales nor file monthly returns. Note the trade-off: you also cannot recover input IVA on your purchases, which matters if you buy a lot of taxed inputs.
- The employer's INPS contribution. The company's 16% social security share is absorbed into the SST.
But "single tax" does not mean "only tax." Several obligations survive, and owners who assume otherwise end up in arrears:
- Employees' social security. Only the company's share is replaced. You must still withhold the employee's roughly 8.5% INPS contribution from salaries and remit it.
- Payroll withholding on wages. Personal income tax withholding for your staff continues as normal.
- Customs duties and import taxes. The importer qualification test above does not exempt you from duties at the port.
- Property and transaction taxes. The 2026 budget overhauled property taxation with new transfer and rental-income codes; owning or renting out real estate carries its own filings.
- E-invoicing. Simplified tax does not mean informal paperwork. Since January 2026, electronic issuance with a QR code and Unique Document Identifier is mandatory for invoices and tax-relevant documents, and micro and small enterprises have been inside the DNRE e-invoicing system since the final rollout phase in 2022.
The Gross-Sales Catch: When 4% Costs More Than 20%
Here is the arithmetic every owner should run before celebrating. Under REMPE you pay 4% of every escudo of sales. Under organized accounting you pay roughly 20% of profit. Ignoring VAT and social security for a moment, the two break even when your net margin is 20%: a company with CVE 8 million in sales and a 20% margin pays CVE 320,000 either way.
- Above a 20% margin, REMPE usually wins — often by a lot. A consultancy with CVE 6 million in sales and a 40% margin pays CVE 240,000 under REMPE versus CVE 480,000 of IRPC alone under organized accounting, before counting the IVA and INPS compliance it also escapes.
- Below a 20% margin, organize your accounting. A minimarket with CVE 9 million in sales and an 8% margin pays CVE 360,000 under REMPE versus about CVE 144,000 of IRPC on its CVE 720,000 profit. The simplified regime would more than double its income-tax bill.
The full comparison is more nuanced because REMPE also absorbs IVA and employer INPS, which can be worth several more points of sales for labor-heavy businesses. But the direction of the bias never changes: the thinner your margin, the worse a gross-receipts tax treats you. Importers and retailers with single-digit markups should model both regimes with their real numbers — ideally with a local contabilista — rather than assuming "simplified" means "cheaper."
Also remember the asymmetry of risk. Under organized accounting, a loss year means little or no IRPC. Under REMPE, you owe 4% of sales whether you made money or not. If your revenue is volatile, that fixed drag on turnover deserves a line in your cash forecast.
Where Does "2.5%" Come From? Clearing Up the Confusion
If you have seen a 2.5% corporate rate attached to Cabo Verde, it is real — but it has nothing to do with micro enterprises. That rate belongs to approved technology companies operating in the Special Economic Zone for Technologies, or ZEET, anchored at the TechPark CV campuses in Praia and Mindelo. It is an investor incentive for the ICT sector, not a small-business regime, and qualifying requires ZEET approval for a technology activity.
Similarly, you may still see the standard rate quoted as 21% or 22% in older guides. The 2026 State Budget cut the general IRPC rate to 20%, so treat anything above that as stale. When comparing regimes, the live numbers are 4% of gross sales under REMPE versus 20% of profit under organized accounting.
Staying Compliant Once You Are In
Qualifying is the easy part. Staying in good standing takes rhythm:
Pay the SST quarterly, on gross sales. The tax is levied on the gross amount of sales for the taxable year and collected in quarterly instalments. Because the base is sales and not profit, your quarterly sales tally is your tax return in miniature — keep it exact.
Issue compliant e-invoices for everything. Every invoice needs its QR code and Unique Document Identifier through the DNRE system. Buyers increasingly refuse undocumented purchases because they cannot deduct them, so sloppy invoicing costs you customers as well as compliance.
Watch both ceilings continuously, not at year-end. Headcount and turnover are both live tests. Hiring your eleventh employee or crossing CVE 10 million in sales moves you into organized accounting. Plan the transition — chart of accounts, IVA registration rhythm, monthly filings — before the growth year, not during the scramble after it.
Keep sales records even though your books are "simplified." Simplified never meant optional. You need credible records of gross sales to compute the SST, to prove you are under the thresholds, and to survive a DNRE query. Bank deposits that do not reconcile to declared sales are the classic trigger for a deeper look.
Do not mix personal and company money. With a gross-sales tax, every personal expense paid from the business account still leaves the sales base untouched — but it pollutes the records you need to defend that base. Run one business account, pay yourself deliberately, and keep the trail clean.
Track Gross Sales Like Your Regime Depends on It — Because It Does
Under REMPE, your most important number is not profit. It is cumulative gross sales: it sets your quarterly payment, proves your threshold position, and reconciles against your e-invoices and bank deposits. A simple quarterly sales ledger — invoices issued, by month, tied to deposits — covers most of what the regime asks of you, and it doubles as the early-warning system that tells you when growth is about to graduate you into organized accounting.
That is straightforward to maintain in plain-text accounting. If you want a starting point, the documentation walks through ledger setup, and the Fava dashboard turns the same data into charts that make a quarterly sales trend — and an approaching CVE 10 million ceiling — visible at a glance.
Simplify Your Financial Management
Whether you end up paying 4% of sales under REMPE or 20% of profit under organized accounting, the regime only works if your numbers are right — and clean books are what make the cheaper option defensible. Beancount.io offers plain-text accounting that is transparent, version-controlled, and AI-ready, so your sales ledger, quarterly SST math, and threshold tracking all live in one auditable file. Get started for free and keep your Cabo Verde tax position organized from day one.
