Over recent months the legal team representing TRG in Cape Verde have been trying to clarify and resolve an issue surrounding the correct interpretation of an amendment to Article 13 of the personal tax code that came into effect during the pandemic. This has become pressing because, as we start to circulate Owners Statements for the periods after March 2022 we are seeing the recovery - slow as it might seem - of the resorts and their ability to deliver rental income to Owners.
Prior to the change to Article 13, all rental income to owners of TRG property on Sal were exempt from with-holding tax which other non-resident owners of property in Cape Verde have had to pay on their rental income.
The tax authorities are suggesting that there will now be a requirement for all Owners who are not domiciled in Cape Verde to pay a tax of 10% on any income they derive from the ownership of the property. This would be applied, we understand, to the amount actually due for distribution (rather than the gross figure). TRG are, through our legal representatives' tax experts seeking to obtain a binding ruling from the Cape Verde tax authorities. We are hopeful that this could result in with-holding tax not being applied to the TRG properties.
In the meantime, as prudence dictates, we will account for the with-holding tax in the future quarterly accounting periods so that should the tax ruling go as we hope it can be distributed without the deduction. We will keep you updated as this matter progresses.
In an update to other posts, we believe we have clarified through representatives of the LBGs that rental income can be paid to the LBG Companies (rather than, for example) to the FSCS. We are now seeking to get arrangements in place to allow funds to be distributed through that process.