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WT/TPR/S/322/Rev.1 â¢ Cabo Verde - 36 taxes, but sets out general rights and obligations in relation to tax matters. In addition, the Tax Execution Code (Law No. 49/VIII/2013 of 26 December 2013) regulates the enforcement of tax debts and refunds. 3.32. Imported goods are subject to VAT, and may also be subject to Special Consumption Tax and an Ecological Tax. Cabo Verde introduced VAT on goods and services on 1 January 2004.24 VAT is levied at a single rate of 15.5%, in principle.25 On imports, VAT is applied on the customs value inclusive of import duties and other border charges. Exports are exempt from VAT. Tourism establishments were subject to a lower rate of VAT (6%) from 2005 until 2012. Furthermore, from 2008 onwards certain goods and services subject to price regulation (petroleum products, electricity, water, telecommunication services, and maritime transport of goods) were effectively taxed to a lesser degree, as VAT was applied only to a fraction of the basic tariff. However, except for butane gas, these VAT reductions have been cancelled through the State Budget law for 2013 (and in subsequent years).26 3.33. The State does not pay VAT on operations in the exercise of its governmental authority, and services provided by non-profit organizations (trade unions and organizations of a political, religious, patriotic, humanitarian, philanthropic, recreational, sporting, cultural, environmental or civic nature) are exempt from VAT. Some goods and services related to agriculture, forestry, livestock and fishing are also exempted according to the VAT Law, as well as "staple" goods and certain agricultural inputs.27 Furthermore, VAT exemptions may accorded as investment incentives, e.g. in the so-called Establishment Agreements. 3.34. With respect to the taxpayers, operators who do not have an annual income exceeding CVEsc 180,000 and do not engage in importation, exportation or similar activities do not need to add VAT to their invoices, and operators earning up to CVEsc 5 million per year may opt for a simplified regime (5% VAT).28 3.35. Certain goods are subject to a Special Consumption Tax (Imposto sobre Conumos Especiais - SCT)29 SCT is applied on domestic products when the manufactured good leaves the production facility, and at the border for imports. The SCT is principally levied on alcoholic beverages, tobacco, petroleum products, precious stones and jewellery, motor vehicles, yachts, firearms and certain works of art (Table A3.2). The standard rate of SCT is 10%, and higher rates apply to tobacco products (20%), alcoholic beverages (40%), and used motor vehicles for the transportation of passengers or goods (40% to 150%).30 3.36. Imported and domestically-produced goods sold in non-biodegradable packaging, or packaging generating waste (e.g. cardboard, paper, bottles, plastic and metal), are subject enhance tax compliance, and reduce the scope for fraud and tax evasion. The General Tax Code stipulates that even illicit acts may be taxable if certain requirements are met (Article 9). 24 The basic legal provision is VAT Regulation Law No. 21/IV/2003 of 14 July 2003, last modified by Law No. 51/VIII/2013 of 27 December 2013. 25 A volcanic eruption began on Fogo Island in late November 2014. Mobilizing resources to repair the extensive damage caused by it, the VAT rate was increased from 15% to 15.5% with effect from 1 January 2015. The rate hike is intended as an extraordinary and temporary measure for the year 2015. The higher rate is applied to all goods and services, except water and electricity, which continue to be taxed at 15%. 26 Law No. 23/VIII/2013 of 31 December 2012. The 6% rate for tourism enterprises was applied according to Law No. 53/VI/2005 of 3 January 2005, and is still in effect for contracts concluded before the end of 2012. The special VAT regime for certain goods and services was introduced through the State Budget Law for 2008 (Law No. 20/VII/2007 of 28 December 2007). For butane gas, 15.5% VAT is only added to 16.65% of the price-regulated basic tariff for the product. 27 The exemptions are specified in Articles 9 to 14 of the VAT Law and in an annex to Law No. 21/IV/2003 of 14 July 2003. Requests for VAT exemptions are lodged through the electronic platform described in section 3.2.4. 28 However, if VAT is not levied on their sales, or the simplified rate is applied, these operators may not claim tax credit for VAT paid on their inputs. Those not subject to VAT may switch to the simplified or ordinary VAT regime at any time, but are obliged to stay with the chosen regime for minimum five years. Clients of taxpayers in the simplified VAT regime may not claim the 5% input VAT on their side. Taxpayers eligible for the simplified regime may switch back and forth between the ordinary and simplified regime without time limits. 29 The STC is levied in accordance with Law. No. 22/IV/2003 of 14 July 2003, as amended by Laws Nos. 37/VI/2003 of 31 December 2003, 48/VI/2004 of 26 July 2004, and 10/VIII/2011 of 30 December 2011. 30 The higher rates of STC were adjusted through Law No. 10/VIII/2011 of 30 December 2011.