São Tomé and Príncipe implements 15% VAT 2023

Sales tax to be replaced by potential 15% VAT 2023

The African island state of São Tomé and Príncipe is set to implement a Value Added Tax regime. This is likely to be in April 2023. It will replace the existing 5% Turnover Tax.

São Tomé and Príncipe last attempted to introduce VAT three years ago. However, it was paused in March 2020 as COVID lockdown was introduced.

The likely standard rate will be 15% with a reduced rate for essential foods and service supplies. The proposed VAT regime will replace the following indirect taxes:

1. general consumption tax;
2. tax on traded services;
3. tax on alcoholic and spirits and cigarettes;
4. tax on telecommunications and hotel services; and
5. restaurant tax.

The provisional announcement came in conjunction with work with the IMF and follows a change of government, after the Independent Democratic Action party won an absolute majority in parliamentary. Last year, the São Tomé and Príncipe’s Tax Direction and Customs Administration undertook a study of the new Angola VAT regime with the support of the Economic Commission for Africa.

Sao Tome and Principe will join 174 countries with VAT already in place. There are around 20 with sales taxes, including the US.

Countries with VAT or GST Jan 2023