Sào Tomé is a small island nation which is located in the Gulf of Guinea, this is off the west coast part of Africa.
As a business environment, the country’s (STP) investment priorities are:
- Agriculture
- Fisheries
- Tourism
- Infrastructure
- Hub function
With these, Sào Tomé is becoming a fast-growing economy. This is made possible by the country being democratic, peaceful, and high illiteracy rate. The government of Sào Tomé also generates revenue by taxing.
Tax consideration in Sào Tome
Sào Tomé and Principe generate domestic revenues from indirect tax and this helps boost the country’s economy;
Indirect Taxes
Indirect taxes are taxes that can be transferrable, this is where liability is shifted to others, like value-added tax (VAT), export duties, custom duties, and stamp duties.
Excise taxes and import duties
In Sào Tome, tax revenue has a significant reliance on indirect taxes (excise taxes and import duties). Domestically produced and imported goods are levied with excise tax, which varies from 5-to 20%, the products exempted from this tax are petroleum products, beverages including alcohol, vehicles, and tobacco. There is an excise tax on services at 5%.
Excise duties on imported petroleum products alone, makeup to half of the percentage of the total excise duties and alone averaged about 11.7% of total tax revenue.
Custom duties
Due to a large increase in imports, and foreign investment in the construction and tourism sectors, the customs collection has increased by about 39.3%. The range of customs duties is mostly 0 – 20%, the average collected custom duties are at the rate of 26.5% of the total revenue, which makes 3.7% of the country’s GDP. The custom duties, together with the excise duties and other smaller taxes like stamp duty, make up to 69.7% of tax revenue, making about 10% of the GDP.
Direct Taxes on Income
Direct taxes are non-transferable taxes paid by the taxpayer or person to the government of Sào Tomé. In Sào Tomé, these taxes include corporate taxes, personal taxes, and other smaller taxes.
Corporate taxes, personal taxes, and other smaller taxes
The direct tax system in Sào Tomé recently changed, personal income tax changed from a flat rate of 13% to a progressive rate of 10-20%, on the other hand, corporate income tax rate changed from a progressive range of 25-45% to a single rate of 25%; other smaller taxes like urban property tax, made up to less than 1% of the tax revenue.
