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São Tomé and Príncipe

Country Name: Democratic Republic of São Tomé and Príncipe
Currency: São Tomé and Príncipe Dobra (STN)
Primary Tax Authority: Directorate of Taxes and Contributions (Direção de Impostos e Contribuições)
Key Legislation:

  • General Tax Code
  • Personal Income Tax Code
  • Corporate Income Tax Code
  • Value Added Tax (VAT) Code

Fiscal Authority Allocation

Centralized Fiscal System:
São Tomé and Príncipe operates a centralized tax system. The Directorate of Taxes and Contributions (DTC) is responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), and VAT. Local governments have limited taxing authority.

Corporate Income Tax (CIT)

Standard Rate: 25%
São Tomé and Príncipe imposes a corporate income tax rate of 25% on the net taxable income of resident companies. Non-resident companies are taxed on income sourced within the country.

Corporate Forms and Taxation:

  1. Corporation (Sociedade Anónima – SA): The most common form of company in São Tomé and Príncipe, subject to the 25% CIT rate.
  2. Branches of Foreign Companies: Taxed at the same CIT rate on São Tomé and Príncipe-sourced income.

Exemptions and Incentives:

  • Tax Holidays: Companies in priority sectors such as tourism, agriculture, and fisheries may qualify for tax holidays of up to five years.
  • Investment Incentives: The government offers tax incentives for foreign direct investment (FDI) in infrastructure, renewable energy, and other key sectors, including reduced CIT rates and customs duty exemptions.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 15%
São Tomé and Príncipe applies a VAT rate of 15% on most goods and services. VAT is levied on the sale of goods, provision of services, and imports.

Exemptions:
Certain goods and services are exempt from VAT, including basic food items, healthcare services, educational services, and some financial services. Exports are zero-rated, allowing businesses to reclaim VAT on inputs used to produce exported goods.

Personal Income Tax (PIT)

Progressive Rates:
São Tomé and Príncipe applies progressive personal income tax rates as follows:

  • Up to STN 50,000: 0%
  • STN 50,001 to STN 100,000: 10%
  • Above STN 100,000: 20%

Dividends:
Dividends paid to residents and non-residents are subject to a 10% withholding tax.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to the social security system, which provides pensions, healthcare, and unemployment benefits.

  • Employer Contribution: 14% of gross salary.
  • Employee Contribution: 3% of gross salary.

Withholding Taxes

  • Dividends: 10% for residents and non-residents.
  • Interest: 10%
  • Royalties: 10%
    Withholding tax rates may be reduced under São Tomé and Príncipe’s double taxation agreements (DTAs).

Transfer Pricing Rules

São Tomé and Príncipe does not have formal transfer pricing regulations, but related-party transactions are expected to follow the arm’s-length principle in line with international standards.

Special Tax Regimes

  • Tourism and Agriculture Incentives: Companies investing in tourism and agriculture may benefit from tax holidays, reduced CIT rates, and customs duty exemptions. These sectors are prioritized for economic development.
  • Free Trade Zones: São Tomé and Príncipe has free trade zones that offer tax incentives, including reduced CIT rates, customs duty exemptions, and simplified tax procedures for businesses operating in these zones.

Other Taxes

  • Property Tax: Property taxes are levied annually based on the value of land and buildings. The rates vary depending on the location and use of the property, typically ranging from 0.5% to 1%.
  • Customs Duties: Import duties are levied on goods brought into the country, with rates ranging from 5% to 30%, depending on the type of goods.
  • Excise Taxes: Excise duties are imposed on certain goods such as alcohol, tobacco, and fuel.

Double Taxation Agreements (DTAs)

São Tomé and Príncipe has signed a limited number of double taxation agreements (DTAs) with other countries, mainly Portuguese-speaking nations. These agreements help reduce withholding taxes on dividends, interest, and royalties, and prevent double taxation of cross-border income.

Local Taxes

Local governments in São Tomé and Príncipe do not have significant taxing authority. Most revenue collection, including CIT, PIT, and VAT, is managed by the central government through the Directorate of Taxes and Contributions (DTC).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by March 31st of the following year. Personal income tax returns are due by the same date. The tax year in São Tomé and Príncipe follows the calendar year.

Penalties for Late Filing:
Penalties for non-compliance or late filing include interest on overdue taxes and fines. Interest rates on unpaid taxes are generally set at 1.5% per month, with additional penalties for significant delays.

Recent Developments

Investment in Tourism and Agriculture:
São Tomé and Príncipe is actively promoting investment in the tourism and agriculture sectors as part of its economic diversification strategy. The government offers attractive tax incentives, including tax holidays and reduced CIT rates, to encourage foreign direct investment in these sectors.

Energy and Infrastructure Projects:
The government is investing in renewable energy and infrastructure development, with a focus on solar and hydropower projects. Tax incentives are available for companies involved in infrastructure development, including customs duty exemptions and reduced VAT rates for equipment and materials used in renewable energy projects.

International Cooperation:
São Tomé and Príncipe continues to strengthen its international tax agreements and cooperation efforts, particularly with Portuguese-speaking countries, to enhance trade relations and tax transparency.


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