The Sao Tome and Principe's new VAT regime enters into force on 1 June 2023. The VAT regime replaces several prior taxes, including the general consumption tax, the tax on services, the tax on alcohol and spirits and cigarettes, the tax on telecommunications and hotel services, and the restaurant tax.

The new VAT regime includes a standard VAT rate of 15% on supplies of goods and services, including imports. A reduced rate of 7.5% applies to a basket of basic goods, including rice, flour, pasta, bread, milk, and beans (standard rate on 50% of the value). Exports are zero-rated and certain supplies are exempt, including:

• The provision of life insurance and reinsurance;
• The following financial intermediation operations, but excluding those for which a specific fee or consideration is charged:
  • granting credits and managing credit guarantees;
  • currency exchange and other currency-related transactions;
  • operations relating to financial deposits and account management;
  • the transmission of financial securities; and
  • management of common investment funds;
• The transfer of investment gold;
• The transfer of the right of ownership of immovable property intended for residential purposes, excluding the first transfer; and
• Leasing of immovable property intended for residential purposes.

The general VAT regime does not include a specific exemption/registration threshold, although a special regime is provided for small taxpayers with turnover below STD 1 million in the previous calendar year, with the exception of public companies, public limited companies, and limited partnerships. Unless the special regime is waived, taxpayers with turnover below STD 1 million but not lower than STD 100,000 in the previous year are required to pay a special VAT at the rate of 7% on monthly turnover. If turnover in the previous year is below STD 100,000, a fixed monthly fee is payable equal to 2% of 1/12th of STD 100,000, or STD 166.7 per month (100,000 / 12 x 2%).

Periodic VAT returns (declarations) are due by the last day of the month following each month and must be submitted electronically. VAT payments are due with the return. Non-residents are also generally subject to VAT return and payment requirements if making supplies in Sao Tome and Principe. If the non-resident does not have a permanent establishment in Sao Tome and Principe, a tax representative must be appointed to fulfill their obligations, unless they opt for the simplified registration regime. In the case of supplies of services, however, the recipient of the services may be held responsible for paying VAT if the recipient is a taxable person (i.e., reverse charge).

Click the following links for more information on the new VAT regime from the Sao Tome and Principe Tax Directorate, including a VAT manual and a series of updates and administrative guidelines on the VAT regime.