Transfer Pricing in Cabo Verde

The legal framework

Cabo Verde's transfer pricing rules rest on two instruments. Article 65 of the Corporate Income Tax Code (Lei n.º 82/VIII/2015) carries the arm's length standard; Portaria n.º 75/2015 of 31 December, in force since 1 January 2016, supplies the machinery. The Code has been amended in almost every budget cycle since, most recently by Lei n.º 69/X/2025; the Portaria never has.

The 2024 Budget (Lei n.º 35/X/2023) changed Article 65's character. Paragraph 1 now deems related-party income to be computed for tax purposes as if independent-party terms had been agreed, rather than requiring the parties to contract at arm's length. Paragraph 2 makes economic substance and actual conduct the basis of comparison, expressly not confined by the contract. Paragraph 3 adds a non-recognition power: where the arrangement as a whole is not one commercially rational independent parties would have adopted, so that no mutually acceptable price can be determined, the administration may disregard it or price an alternative. Chapter I of the OECD Guidelines, in statutory form.

Scope is broad. Article 66(1) presumes a special relationship at 20% of capital or voting rights, direct or indirect, counting close family holdings; Article 66(2) reaches permanent establishments and any counterparty in a privileged tax regime, meaning non-taxation or a nominal rate below 10% under Article 32 of the General Tax Code. Portaria article 2 brings purely domestic controlled transactions into scope alongside cross-border ones. The Guidelines are not enacted law, and the Portaria mentions them exactly once — in its preamble, as a source of high importance — but they fill every domestic gap.

Methods, comparables and benchmarking

Article 65(4) CIRPC and Portaria article 5 group the methods: CUP, resale price and cost plus first; profit split, TNMM or another method appropriate to the facts second, available where the first group cannot be applied or would not measure arm's length terms reliably. Read literally that is a soft hierarchy; in substance the test is the most appropriate method, giving the best estimate, the highest comparability, the best data and the fewest adjustments.

Benchmarking is thinner than practitioners expect. Article 5(5) provides that where two or more comparables, or more than one equally appropriate method, produce a range with a reasonable degree of comparability, no correction is required if the tested price or margin falls inside it. No interquartile range, no median and no narrowing rule is prescribed, and nothing obliges the administration to accept a full range either.

There is no domestic comparables database and no preference for local comparables, and secret comparables may not be used in assessment. Article 6(1)(d) makes market economic circumstances — geography, market size, labour and capital costs, competitive position — an express comparability factor, the hook for adjustments any Portuguese, Iberian or West African comparable set will need; each method article separately requires material differences to be quantified and adjusted.

The regulation frames resale price and TNMM around the Cabo Verdean taxpayer; no foreign tested party is contemplated. Article 3(2) makes transaction-by-transaction testing the rule and aggregation the exception, for closely interlinked or continuous dealings. Where a range is relied on, Portaria article 4 requires a year-end adjustment into it — mandatory, and upward only.

Documentation: what the DNRE expects

The dossier duty is narrow and not keyed to transaction value. Portaria article 14(2) imposes it on four populations only: Large Taxpayers, privileged-regime beneficiaries, permanent establishments of non-residents, and entities the administration designates. Everyone else still owes the article 14(1) duty to hold information proving market parity and the choice of method.

The operative thresholds therefore live in the Large Taxpayer regulation, Portaria n.º 55/2013 as republished by Portaria n.º 24/2023: turnover above CVE 300 million (about EUR 2.7 million), taxes paid above CVE 15 million, a high risk score, supervision by the Banco de Cabo Verde, telecoms or utilities activity, a corporate link to a covered company, or designation by the National Director. Cabo Verde's OECD profile presents the two money figures as an exemption in a paragraph 2-A of Portaria 75/2015 that does not exist: the numbers are right, the citation is not.

Article 15 sets nine content heads, among them functional characterisation with three years of transaction values, functions, assets and risks on both sides, the group's pricing policy directives, contracts and their compliance history, justification of the method, and the comparables with the technical sheet of any purchased study. There is no master file requirement, and each Cabo Verdean entity of an MNE needs its own stand-alone report.

Timing and language are unforgiving. The file must be contemporaneous and in Portuguese. The article 66(3) related-party disclosure rides on the annual accounting and tax information declaration, due 30 July under article 104(1) CIRPC. The dossier itself is produced on request rather than filed, and no transfer pricing production period exists, so the General Tax Code default of 15 days applies unless the notification fixes another. CbC reporting follows Action 13: EUR 750 million consolidated revenue, report within 12 months of year end under articles 105 and 106 CIRPC, reporting-entity notification by the income-return deadline.

Audits, penalties and the enforcement climate

Enforcement is structurally concentrated: the dossier duty tracks the Large Taxpayer population, administered by the Repartição Especial dos Grandes Contribuintes. The 2023 reform widened that population deliberately, reaching bank-supervised entities, utilities and companies linked to covered groups on the stated ground that their operations are complex and need closer fiscal monitoring; the Court of Auditors recommendation recorded in the same preamble supports a different change, the rise in the turnover criterion to CVE 300 million. No DNRE audit statistics are published, so risk must be read off the legal architecture, not off enforcement data.

Penalties sit in the tax offences regime (Decreto-Legislativo n.º 3/2014, republished by Lei n.º 116/IX/2021). Failing to organise or refusing to produce the dossier, short of fraud, costs CVE 100,000 to 2,500,000; where the administration fixed a delivery deadline in advance, the offence completes only once that deadline passes. Inaccurate or omitted information costs CVE 70,000 to 750,000, and a missing or late CbC notification or report CVE 50,000 to 1,500,000.

There is no transfer pricing surcharge. An adjustment produces IRPC at the general rate, 20% from 2026, plus compensatory interest at the Banco de Cabo Verde rediscount rate, increased cumulatively by 1% a month and capped at 60%. Nor is there a documentation-based penalty defence; the protection is structural. Articles 108 and 109 of the General Tax Code presume declarations and properly organised accounts true and in good faith, and that presumption falls away where the taxpayer fails its duty to clarify its position — a maintained dossier is what keeps it alive. Assessment lapses five years from the start of the calendar year after the taxable event, and must be validly notified inside that window.

Dispute resolution and advance certainty

There is no APA programme — unilateral, bilateral or multilateral — and no cooperative compliance or ICAP participation. For a regime that now carries a non-recognition power, that is the most consequential gap.

The substitute is the binding ruling (informação vinculativa) under articles 99 and 100 of the General Tax Code, with procedure and fees in Decreto-Lei n.º 74/2020: a reply within 75 days for 1 to 50 units of account (the national minimum wage), or 45 days for 10 to 100 units where the taxpayer requests urgency and supplies its own analysis. A ruling binds only for the transaction asked about, and only where full disclosure was made and the transaction was carried out as described. Rulings are published anonymised, lapse if the facts or law change, and may be revoked prospectively only after a year.

On adjustments the position is asymmetric and often misstated. Article 65(6) CIRPC and Portaria article 18 require a domestic correlative adjustment in the counterparty's profit where the administration corrects a Cabo Verdean IRPC or IRPS taxpayer. Cross-border, article 65(7) permits a corresponding adjustment only where a convention provides one — and with six treaties in force, most inbound structures have no route to relieve economic double taxation. MAP exists only under those treaties, and there are no secondary adjustment rules.

An assessment is contested by reclamação within 60 days, then optionally by recurso hierárquico within 30 days, then by judicial impugnação. No Cabo Verdean transfer pricing judgment has been published.

Pillar Two and what changes in 2026

Article 101 of the 2026 Budget (Lei n.º 69/X/2025) creates the imposto mínimo global, Cabo Verde's first minimum-tax legislation. It applies to Cabo Verdean constituent entities of an MNE or large domestic group with consolidated revenue of EUR 750 million or more in at least two of the four preceding fiscal years. The rate is 15% on an effective tax rate basis, the national top-up being the difference between that minimum and the Cabo Verdean effective rate.

Everything else is deferred: article 101(6) leaves the concepts, operation, assessment and collection to a separate diploma that has not appeared in the Boletim Oficial, and safe-harbour qualification is asserted in the heading rather than established. The immediate interaction is arithmetic: IRPC falls to 20% for 2026, and transfer pricing outcomes now feed a covered-tax calculation as well as a taxable profit, so an entity priced to a thin routine return can pull the jurisdictional effective rate toward the floor and convert a pricing position into a top-up liability.

Amount B is not in force: under evaluation, with no implementing regulation as of July 2025 and no operating-expense-to-sales ceiling chosen. Cabo Verde has endorsed the Inclusive Framework commitment to respect Amount B outcomes from covered jurisdictions, but says it has no legal basis to give effect to an outcome applied by a jurisdiction that is not covered.

How practitioners should respond

Four things drive practice. First, the Large Taxpayer list decides who prepares a dossier, so the compliance question is a status question. Check the current list — approved by despacho and published in the Boletim Oficial for two years, and since Portaria n.º 53/2023 covering every criterion in article 1 rather than a subset — and re-check annually: a bank-supervised or utility-sector affiliate is caught irrespective of size. Being off the list is not being outside the regime: the article 66(3) disclosure and the article 14(1) evidential duty carry no threshold.

Second, build the file in Portuguese and build it once per entity. Two Cabo Verdean subsidiaries of one group need two stand-alone reports, and a group master file discharges neither. Article 15's heads map poorly onto a standard OECD local file — three years of transaction values, contract compliance history, the technical sheet behind any purchased benchmarking study. Localise; do not translate.

Third, price the absence of an APA into the structure. With no advance agreement available, a non-recognition power in Article 65(3) and corresponding adjustments confined to a six-treaty network, exposure is managed before the transaction: a binding ruling on the method, contemporaneous documentation to keep the good-faith presumption alive, and year-end adjustments actually booked where a range is used.

Fourth, read the OECD profile against the Boletim Oficial rather than instead of it. Its citations to article 98-C of the offences regime, to a paragraph 2-A of Portaria 75/2015, to a 31 July deadline and to a limitation period running from when the issue was identified are each wrong or superseded, and its account of the Portaria taking the OECD PE attribution reports into account has no counterpart in the instrument itself.