Cape Verde: State revenues rise 17.5% in 2022

The revenues of the Cape Verdean state increased 17.5% in 2022, compared to the previous year, to more than 53,100 million escudos (480 million euros), mainly with the growth of taxes collected, indicate official data.
According to data from the summary report on budget execution from January to December, this performance is mainly the result of “increased collection” of taxes (29.8% compared to 2021) and social security contributions (4.1%).
The Ministry of Finance’s document, which is provisional, also states that total spending from January to December increased by 5.4%, compared to the 12 months of 2021, to over 66,777 million escudos (605 million euros).
The Cape Verdean state thus collected 87.5% of the 54,270 million escudos (495 million euros) of revenues budgeted for the entire year by the government.
In revenues, the Personal Income Tax (IRPS) increased 6.4% by the end of December, to almost 6,433 million escudos (58.2 million euros), while the tax on company profits (IRPC) increased, also year-on-year, 17.3%, to almost 3,201 million escudos (28.9 million euros) in 12 months.
In indirect taxes, Value Added Tax (VAT) continues to recover from declines caused by the covid-19 pandemic and the drop in tourism, yielding over PTE 17,917 million (€162 million) in 2022, up 37.8% year-on-year.
Cape Verde is recovering from a deep economic and financial crisis, resulting from the sharp drop in tourism demand – a sector that guarantees 25% of the archipelago’s Gross Domestic Product (GDP) – since March 2020, due to restrictions imposed to control the covid-19 pandemic.
The country experienced a historic economic recession in 2020, equivalent to 14.8% of GDP, followed by a 7% economic growth in 2021, driven by the recovery of tourism demand in the fourth quarter.
Due to the economic consequences of the war in Ukraine, the Cape Verdean government revised its outlook for economic growth in 2022 from 6% to 4%, but in late October it revised this forecast back to at least 8% and in late December to more than 10%.
The Cape Verdean government intends to raise the weight of tax revenue collection to 30% of GDP, from the current 20%, the deputy prime minister said earlier, assuring that it can be done without increasing the incidence.
“We have the ambition to put that tax revenue as a percentage of GDP, which is now around 20 to 22%, at 25% in the first phase and can even reach 30% of GDP in the second phase, if the reforms are undertaken, without increasing incidence. Just fighting tax evasion, fraud and tax avoidance, and substantially increasing the tax base, also fighting informality”, affirmed Olavo Correia.
The Minister of Finance also argued that, in order to achieve this, the focus will primarily be on human resources, but also by combating informality in business.
The revenues of the Cape Verdean state increased 1.8% in 2021, compared to the previous year, to 44,525 million escudos (404.3 million euros).