Taxes
Taxes and Profit Repatriation in São Tomé and Príncipe: What Investors Need to Know
In a new jurisdiction investors usually ask two questions: how much is left after tax, and can they bring the money home? In São Tomé both answers depend on one decision made at the very start — whether the investment is registered under the Investment Code.
Main tax rates
| Tax | Rate | Comment |
|---|---|---|
| Corporate income tax (IRC) | 25% | Down to 10% for approved investment projects |
| VAT (IVA) | 15% | In force since June 2023; reduced rate 7.5% |
| Personal income tax (IRS) | 0–25% | Progressive; income up to STN 11,700 a year is tax-free |
| Withholding on payments to non-residents | 15–20% | Depends on the type of income: services, royalties, dividends |
| Social security (INSS) | 6% + 4% | 6% paid by the employer, 4% withheld from the employee |
| Property transfer tax (SISA) | 8% | Up to 15% if the buyer is linked to a low-tax jurisdiction |
Corporate income tax is paid in three instalments — in June, September and December — with the final settlement on the annual return. A 20% rate applies to income subject to withholding at source (IRC Code, articles 81 and 92).
The Investment Code: the investor’s key tool
Investor incentives are set out in three laws: the Investment Code (Decree-Law 19/2016), the Tax Benefits Code (Decree-Law 15/2016) and the temporary Investment Incentives Law (09/2023). They apply to projects of €50,000 or more, and the scope depends on the size of the investment:
| Regime | Investment | Incentives |
|---|---|---|
| Simplified | €50,000 – €1,000,000 | 50% of the general-regime benefits |
| General | up to €4,999,999 | Full package of Code benefits |
| Special | €5,000,000 and above, and projects in special development zones | Tailored terms approved by the Council of Ministers |
The €1,000,000 simplified-regime ceiling was introduced by temporary Law 09/2023, in force for four years from September 2023. The same law allows the government to negotiate incentives beyond the Code directly with investors for projects of €5,000,000 or more in priority sectors: food supply, health, education, energy, IT and foreign-currency generation.
Main general-regime benefits
- a 10% corporate tax rate instead of 25% for new activities;
- full exemption from import duties on equipment not produced locally;
- full exemption from property transfer tax (SISA), and from stamp duty on amendments to the articles for the first five years;
- double-rate accelerated depreciation in tourism, education, health, new technologies and export sectors;
- a deduction of up to 50% of taxable income for high-tech equipment in the first five years;
- spending on roads, water, power, schools and hospitals is deductible for five years — at 150% in Cantagalo, Lemba, Lobata, Caué and Príncipe, and at 100% elsewhere;
- training costs for local staff are deductible.
Sector incentives
| Sector | What the Code provides |
|---|---|
| Agriculture, livestock, fisheries | Corporate tax cut by 50% for 7 years, then 25% off the tax base for 2 more years; no duties on imported equipment or on exports (cocoa, coffee, vanilla, pepper) |
| Tourism and hotels | No import duties; depreciation up to three times faster; 30% deduction of reinvested profits for projects with 20+ jobs |
| Education and health | Same as tourism, with no minimum investment |
| Trade | Corporate tax cut by 50% for the first 5 years; international trading from São Tomé taxed at 5% |
| Special development zones: Cantagalo, Lemba, Lobata, Caué, Príncipe | No import duties or SISA; reinvestments receive the same benefits as the original investment |
| Large projects over USD 10 million and infrastructure concessions | Exceptional incentives for up to 7 years under an investment contract with the State |
Eligibility. The investor must show at least 20% own capital and a stable financial position, provide certificates of no tax or social security debt, and submit a feasibility study with permanent jobs for local workers.
How approval works. The application is filed with APCI, the Trade and Investment Promotion Agency and one-stop shop for investors. APCI gives a preliminary opinion on a draft project within 8 days. Customs, tax and planning authorities issue opinions within 5 working days, and the project then goes to the minister for approval. The result is an administrative investment contract with the State, and projects with foreign capital are also registered with the Central Bank. Incentives do not apply automatically, and the money must enter the country officially, through a bank.
Important: if assets acquired with incentives are sold without the State’s consent, the benefit is cancelled and the State is entitled to 30% of the sale value.
How to repatriate profits
- The company approves its annual accounts and pays corporate income tax.
- The shareholders resolve to distribute dividends.
- The company withholds tax at source.
- The bank transfers the money abroad. For registered investments the transfer goes through the Central Bank (BCSTP) and is guaranteed by the Code.
The dobra has a fixed peg to the euro (STN 24.5 = €1), so a euro investor does not lose on the exchange rate; for a dollar investor the risk equals the EUR/USD risk.
Personal tax residence
You are tax resident if you spend more than 180 days a year in the country or have your centre of vital interests there. Residents are taxed on worldwide income; non-residents only on São Tomé-source income. A passport or residence permit does not by itself create or remove tax residence.
Double tax treaties
São Tomé’s treaty network is small. The main treaty in force is with Portugal: signed on 13 July 2015 and in force since 12 July 2017. It caps source-country tax at 15% on dividends and 10% on interest and royalties, with a credit for tax paid in the other country — which makes a Portuguese holding structure a natural option for European investors.
A treaty with Cabo Verde was signed and approved by Cabo Verde in 2021, but there is no public confirmation that it is in force. There are no treaties with most other countries, so plan your ownership structure with your home-country taxes in mind.
Common mistakes
- Investing without registering the investment. Incentives and repatriation guarantees are much harder to obtain later.
- Paying in capital in cash or through third parties. No bank trail means no basis for repatriation.
- Forgetting VAT. Since 2023 VAT has become a significant part of construction and service costs — build it into the business plan.
MARSF registers investments under the Code, structures the flow of funds in and out and helps with reporting. If you are still choosing a business form, start with our guide on how to set up a company.
About the author
Euclides Martins is the CEO of MARSF Serviços, with more than 13 years of experience in São Tomé and Príncipe. He previously served as Lead Communications Specialist at the national implementation unit of the Enhanced Integrated Framework (Quadro Integrado Reforçado, the WTO-linked Aid for Trade programme), where he was also responsible for liaison with the Government of São Tomé and Príncipe.
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