Cabo Verde Economy Overview

Currency

Cape Verdean Escudo (CVE)

Working hours

44 hours/week

Public/bank holidays

10 public holidays

Capital

Praia

Languages

Portuguese

Population

~598,682

Minimum hourly salary

68.8 CVE

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

In Cabo Verde, misclassifying employees as contractors can lead to penalties, including back taxes, fines, and legal action. Proper classification is crucial to avoid these risks.

Fun fact

More Cabo Verdeans live abroad than in the country itself! Remittances (money sent home) are so big, you might call them the national piggy bank.

Cabo Verde (also known as Cape Verde), an island nation off West Africa, has a stable economy supported by tourism and renewable energy. Its beautiful beaches and rich culture draw many visitors, and the country is also investing in wind and solar power to reduce reliance on imported fuel. The government offers incentives for foreign investment in both sectors, making it an attractive option for business growth. However, challenges like its remote location and dependence on imports remain for companies considering expansion.

Learn more about Cabo Verde’s business environment and how to set up your business there in this guide.

Overview of Cabo Verde's Economy

Cabo Verde’s economy has seen steady growth in recent years despite global challenges. Its GDP as of October 2024 stands at 2.94 billion dollars, while having a population of about 491,233 residents as of the 2021 census.

The economy is heavily reliant on tourism, which accounts for about 25% of its GDP. Its stunning islands, especially Sal and Boa Vista, have drawn increasing numbers of visitors. In 2023 alone, Cabo Verde welcomed over a million tourists, a notable increase from the previous year. These visitors contribute significantly to the economy, not just through spending but by bringing attention to the country’s nature and culture.

Industry Importance to Economy
Tourism Tourism contributes over 25% of GDP, driven by the islands’ natural beauty and cultural attractions. It supports employment and drives foreign investment in hospitality and infrastructure.
Renewable Energy Cabo Verde aims to achieve 50% renewable energy by 2030, creating opportunities for solar, wind, and energy storage solutions.
Fisheries The country’s rich marine resources are vital for domestic consumption and exports, with untapped potential for sustainable aquaculture and fish processing.
Services and Trade Services, including banking, logistics, and transportation, dominate the economy, benefiting from the country’s strategic location in Atlantic trade routes.
Agriculture Though limited by arid conditions, agriculture remains crucial for food security, with opportunities for modern irrigation and crop diversification.

Additionally, fishing is a key part of Cabo Verde’s economy, making up a large share of its exports. With rich marine life, especially tuna, the country is well-positioned in the Atlantic Ocean, right along major fishing routes. This gives Cabo Verde an important role in the global seafood market. For many people on the islands, fishing is not just a job but a way of life, helping to provide food and support local communities.

Remittances sent by Cabo Verdeans living abroad also form an important part of the economy. These funds help support local companies and improve living standards. Cabo Verde’s diaspora, particularly in the United States, Europe, and Brazil, plays an important role in the economic development of the islands. To further diversify its economy, the government has been focusing on the development of renewable energy, particularly wind and solar power, given the country’s high solar potential and wind patterns.

Even with these strengths, Cabo Verde has its share of challenges. The country has limited natural resources, and its farming and fishing industries are at risk from climate change, especially with droughts and rising sea levels. Being a small island nation that relies on imports also makes it vulnerable to disruptions in global supply chains.

Taxes

Employer tax: 15%

Social Security (Pension, Disability, Survivors)

~15%

 

NOTE: there is no separate statutory unemployment insurance or mandatory medical insurance scheme under this contribution; any occupational injury coverage may be added depending on industry requirements. 

Employer tax: 15%

Social Security (Pension, Disability, Survivors)

8% of gross salary

Income Tax

Cabo Verde levies personal income tax under the Imposto Único sobre Rendimentos (IUR). The tax is progressive, often ranging from 15% to about 25%.

Gross Income (CVE)

Up to 960,000

960,001 – 1,800,000

More than 1,800,000

Progressive Tax Rate

16.5%

23.1%

27.5%

Overview of Cabo Verde's Business Regulations

Cabo Verde is quickly becoming an attractive spot for companies looking to expand or start fresh in a supportive and welcoming environment. With its easy company setup, straightforward laws, and tax incentives, the country is offering opportunities for both local entrepreneurs and international investors to make their mark.

The process of incorporating a business in Cabo Verde is designed to be efficient and simple. Under the Commercial Code, entrepreneurs can easily register their companies through the Commercial Registry. The incorporation process is quick, typically taking between three to four weeks, and can also be completed online. However, business owners are required to make a personal visit to obtain a Tax Identification Number (TIN), a necessary step for all companies in the country. 

The country also offers tax incentives to encourage business investment, particularly in key sectors such as renewable energy, tourism, and industrial development. Under the Investment Code, companies investing in these sectors can benefit from these incentives to reduce the financial burden of operating in the country. An example is the reduction in Corporate Income Tax (CIT), which can be lowered to 21% for companies that meet certain investment criteria. Depending on the size and location of the investment, companies can also enjoy tax holidays or reduced tax rates for a specified period. Another valuable tax incentive offered by Cabo Verde is the Tax Loss Deduction. Previously, companies were only allowed to carry forward tax losses for seven years.

However, the government has removed this limit, allowing companies to carry losses forward indefinitely. This change provides greater flexibility for companies, particularly those in their early stages, as they can offset future profits with any losses incurred during the startup phase or in challenging years.

On top of tax reductions, Cabo Verde also offers customs and VAT exemptions to companies in sectors like manufacturing and agriculture. For example, companies engaged in industrial production of non-hazardous materials, or those focused on waste recycling can benefit from exemptions on customs duties and value-added tax (VAT) for imported equipment and materials needed for their operations. These exemptions help keep costs down by eliminating or reducing fees for importing essential goods and equipment.

What Are the Benefits of Doing Business in Cabo Verde?

Doing business in Cabo Verde offers several advantages, starting with its business-friendly tax system. The country has a low corporate tax rate with special tax breaks for industries like tourism, renewable energy, and agriculture. These incentives help companies save money and grow, making it a great place for investment.

The country’s political stability is another benefit. With its calm governance, Cabo Verde offers a safe environment for doing business. Plus, its prime location between Europe, Africa, and the Americas makes it a key spot for international trade and tourism. The growing tourism industry also offers companies a chance to tap into a booming market, whether through hotels, travel services, or local products. All of this makes Cabo Verde an exciting place to build a business.

What Are the Downsides of Doing Business in Cabo Verde?

One of the challenges of doing business in Cabo Verde is the size of its local market. With a population of just around 491,233 people spread across a collection of islands, the domestic market is relatively small. This scattered population makes it difficult for businesses to scale up quickly, as demand for products and services is limited.

As a result, many companies in Cabo Verde have to look beyond the local market for growth. They often rely on external funding and partnerships, especially from Europe and other international sources, to fuel their expansion. This reliance on foreign support can make businesses vulnerable to global economic shifts or changes in investment climates.

Getting goods and services around the islands can be difficult too. Cabo Verde’s remote location means transportation is expensive, and while the country has worked on improving its ports and airports, the cost of shipping remains high. This makes it harder for companies to bring in or send out goods quickly.

International Expansion into Cabo Verde

There are several expansion options for international companies aiming to enter the Cabo Verdian market. Here are some expansion approaches:

Cabo Verde Employer of Record (EOR)

An Employer of Record (EOR) offers a comprehensive solution by acting as the legal employer for your team in Cabo Verde. This arrangement handles all employment-related responsibilities, including payroll, taxes, and compliance. By partnering with an EOR, your company can reduce administrative burdens and legal risks while concentrating on business goals.

LEARN MORE

Recruitment Agency

Recruiment agencies in Cabo Verde specialize in finding top-tier talent tailored to your company’s needs. They work closely with you to understand your goals, then tap into their local networks to identify professionals with the skills and experience you are looking for.

Whether you are building a core team or filling niche roles, these agencies streamline the hiring process, saving you time and ensuring you find the perfect fit for your company.

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Cabo Verde Professional Employer Organization (PEO)

Professional Employer Organizations (PEOs) are an excellent option for companies looking to expand into Cabo Verde without setting up a full-fledged operation. A PEO can act as your local HR partner, helping you recruit employees, manage payroll, and handle benefits administration while ensuring compliance with Cabo Verde’s labor laws. This arrangement allows you to focus on business growth while the PEO takes care of employee-related responsibilities, making it easier to establish a presence in the market.

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Subsidiary Incorporation

Creating a subsidiary in Cabo Verde involves establishing a legal entity, giving your company independence and a unique identity that makes it easier to integrate into the local economy. The process involves choosing a unique company name, registering with Cabo Verdean authorities, securing licenses, and filing the necessary documents. It is a bit of work upfront, but it pays off with greater autonomy and credibility.

Branch Registration

Branch registration lets you extend your existing operations to Cabo Verde without the need to set up a whole new entity. It is quicker, more affordable, and perfect for short-term projects or market exploration. Keep in mind, though, that the parent company remains on the hook for liabilities since the branch is not a standalone entity.

Staffing Agency

Staffing agencies in Cabo Verde offer reliable solutions for companies needing temporary or project-based support. They specialize in providing flexible staffing arrangements and connecting companies with professionals for short-term assignments or seasonal needs. With their expertise in managing contracts, payroll, and compliance, these agencies ensure that your workforce solutions are efficient and hassle-free.

Business Opportunities in Cabo Verde

Cabo Verde presents a wealth of business opportunities, particularly in sectors aligned with its economic development strategy. From renewable energy to tourism and fisheries, the country offers a stable environment for investment and growth.

Business Opportunity Reason for Opportunity
Tourism Development The thriving tourism industry provides opportunities for eco-tourism, boutique resorts, and cultural tourism projects, supported by government incentives.
Renewable Energy Solutions Cabo Verde’s ambitious energy goals create demand for investments in solar, wind, and energy storage systems, as well as off-grid solutions for remote areas.
Fisheries and Aquaculture Rich marine resources offer potential for sustainable fisheries, aquaculture, and fish processing for export and domestic markets.
Hospitality and Real Estate With growing tourist arrivals, there is increasing demand for hotels, resorts, and luxury housing developments catering to international visitors.
ICT and Digital Services The government’s push for digital transformation creates opportunities in e-governance, fintech, and technology startups.
Maritime and Logistics Services Cabo Verde’s location makes it a natural hub for Atlantic trade routes, driving demand for shipping, warehousing, and maritime services.
Water Management and Agriculture Arid conditions create opportunities for investments in desalination, modern irrigation systems, and crop diversification to enhance food security.

Cabo Verde’s stable governance, strategic location, and focus on sustainability make it an attractive destination for investment. Businesses in tourism, renewable energy, and fisheries can thrive by aligning with the country’s long-term development goals. With a growing emphasis on digital transformation and infrastructure development, Cabo Verde offers a unique blend of opportunities for investors seeking high potential in an emerging market.

Cabo Verde offers promising prospects for companies willing to invest strategically. Our expertise in business expansion at Remote People ensures that companies can effectively address any challenges and unlock the opportunities within this market.

Are you interested in doing business in Cabo Verde? Remote People can help. Contact us today to assess your business needs and learn how we can assist you in achieving your objectives.