Financial Crime World

Financial Compliance in Sao Tome and Principe: A Comprehensive Overview

Sao Tome and Principe, a small island nation in West Africa, has been making significant strides in developing its financial sector. In this article, we will delve into the key aspects of financial compliance in Sao Tome and Principe, including company incorporation, foreign investment rules, exchange regime, taxation, double taxation treaties, and alcohol advertising regulations.

Company Incorporation

Sao Tome and Principe has a swift procedure for the incorporation of companies, which is carried out at a one-stop shop designated Guichet Unique. The procedure usually takes no longer than 8 days, and if paying an extra urgency fee, it may be completed within 3 days.

Foreign Investment Rules

Foreign investment in Sao Tome and Principe is governed by the Santomean Investment Law (No. 19/2016), Investment Code Regulation (Decree No 18/2017), and Tax Benefits Code (Law No. 15/2016). Key aspects of foreign investment rules include:

  • Protection against measures that may affect private ownership
  • No restrictions on equity participation or control of a local company by a foreign investor

Exchange Regime

The import and export of foreign capital is subject to specific procedures before the Central Bank of Sao Tome and Principe (BCSTP). Key aspects of the exchange regime include:

  • Purchase or sale of foreign currency
  • Imports and exports
  • Current invisible operations
  • Opening and movement of national currency bank accounts in legal currency in foreign countries

Taxation

Sao Tome and Principe has taxation on income, including Individual Income Tax (IRS) and Corporate Income Tax (IRC). Key aspects of taxation include:

  • IRC general tax rate: 25%
  • VAT rate: 7.5% to 15%
  • SISA: a tax that follows upon the transfers, against payments, of the imposed property

Double Taxation Treaties

Sao Tome and Principe has signed an agreement on double taxation with Portugal, where only one of the States is granted the power to impose taxes on the income of individuals or companies.

Alcohol Advertising Regulations

Matters related to alcohol advertising are set out in the Decree Law No. 13/2018, which regulates advertising for alcoholic beverages. Key aspects of alcohol advertising regulations include:

  • Advertising should not be directed to minors
  • Advertising on radio and television is forbidden from 6:00 AM to 10:00 PM

Conclusion

Sao Tome and Principe has made significant strides in developing its financial sector, with a focus on compliance and transparency. The country’s swift procedure for company incorporation, foreign investment rules, exchange regime, taxation, double taxation treaties, and alcohol advertising regulations make it an attractive destination for investors.

Recommendations

Based on our analysis, we recommend that:

  1. Sao Tome and Principe continues to develop its financial sector, with a focus on compliance and transparency.
  2. The government considers introducing regulations for foreign exchange operations to ensure that they are in line with international standards.
  3. Investors conduct thorough research and due diligence before investing in Sao Tome and Principe, taking into account the country’s taxation system, double taxation treaties, and other relevant factors.

By following these recommendations, Sao Tome and Principe can continue to attract foreign investment and develop its economy while maintaining a stable and transparent financial sector.