One of the latest destinations to come into favour is the Cape Verde archipelago, a handful of sleepy islands off the coast of Africa, another hour’s flying time south, after passing the giant peaks of Tenerife. Bare and rugged in some places, green and lush in others, the islands offer a range of opportunities for development. In response, the new investors have ambitious plans for a variety of projects – hotels, apartments, golf resorts, marinas, and all that goes with them.

Infrastructure

The existing infrastructure is far from adequate for all that is envisaged but this, in turn, offers opportunities galore for providers of goods, systems and services. While the sun-worshipper will be happy with the constant, year-round temperatures of 29C, the near-absence of rainfall in many regions provides both challenges and opportunities for providers of eco-friendly technology. Projects involving investments of up to €12bn in the next 10 years bear witness to the hopes and ambitions of the first movers, with much of the initial phases of real estate development already sold.

A number of internationally renowned tourism and development companies have established operations in Cape Verde and individual investors now have access to locally arranged finance, when making real estate investments.
A former colony of Portugal, whose language and legal system it has inherited, Cape Verde struggles with its minimal financial resources and the near absence, until recently, of more than a rudimentary economy. It has a functioning public service, however, and a system of law and public administration which offers the prospect of legal security and enforceability of contracts and obligations.

Taxation – simple but tricky
The tax system is based on that of Portugal, albeit in simplified form, and there are warm relations between the two countries.
While the tax system is gratifyingly simple in its structure, it can be difficult to determine the tax treatment, in practice, of specific transactions, or even to get a reliable interpretation of provisions of the tax law. In some cases – for example, the VAT code – these have been transposed into local legislation, from other more sophisticated tax environments, without complete consideration of how they may be implemented in practice.
PricewaterhouseCoopers, the world’s largest professional services firm, has had operations in Cape Verde for more than 20 years.

PwC Portugal initially entered into the market to provide audit services to local and international clients, but has expanded its presence greatly in the past two years, in order to respond to the needs of the rapidly developing tourism and real estate market. Audit and accounting services are provided locally, while tax and other consulting services are provided by specialists of the Lisbon office.