The creation of the Special Economic Zone on the Cape Verdean island of Maio, approved on Friday in parliament, will allow private developers to move ahead with the largest tourist development in the country, at a cost of 500 million euros, said the finance minister.
At stake is the draft law that creates the Maio Island Special Economic Zone (ZEEIM), approved by the Cabinet in January of this year and which was also approved today, in general terms, in parliament, by all 66 members present at the parliamentary session.
Although without mentioning it directly in the draft law, this model will benefit the “Little Africa Maio” project, the largest tourist development in Cabo Verde, estimated at 500 million euros to generate 4,000 jobs, whose first phase is expected to be built over the next three years on the island by the International Holding Cabo Verde (IHCV) group.
“The promoter is waiting for the creation of the Special Economic Zone on the island of Maio to start with his project, according to information coming from him. Our obligation as the government is to create the conditions, to create the legal framework, to create incentives and to create a framework of trust so that private investors can invest. Now, the private projects are the ones that can give information about the private projects,” said the deputy prime minister and minister of Finance, Olavo Correia, in parliament, when presenting this bill.
The proposal states that entities that “invest, set up or develop activities” there can benefit from “policies and a special regime regarding tax and customs regimes, the Integrated Free Trade Zone, ‘tax-free’ and duty-free shops.
“Such a special regime of incentives, aims to provide the island of Maio and the country with alternative sources of revenue by attracting investment, also providing for a pioneering tax regime for individuals, which is justified and only granted given the size of the project (…), the planned investment and, above all, the development of key infrastructures to leverage the island’s development,” the bill reads.
“With the approval of this law we will be taking the first big step so that the ‘Little Africa Maio’ project, and other private projects, can be built, for the good of the island of Maio, for the good of Cabo Verde,” said Correia.
The future ZEEIM will incorporate the integrated tourism development areas of the south of Vila do Maio, Ribeira Dom João and Pau Seco on Maio island, with a view to “taking advantage of the potential” of the island “in tourism and leisure activities, as well as the development of an international business platform benefiting from the centrality resulting from the link to Africa, the South and North Atlantic and Europe”.
“The aim is thus to contribute towards the transformation (…) into a tourist, residential, cultural and business hub for Africa, with direct consequences on the creation of direct employment and on the construction, maintenance and management of the structures that will be developed,” states the draft law that the government has taken to parliament.
ZEEIM will be “the investor’s single point of contact,” bringing together the various services, state departments and the municipality of Maio, to “provide the investor, at a single point, with all procedures relating to investment and installation,” including registration, administrative, customs, tax, commercial, industrial, environmental and social formalities, relating to tourism use, work permits, and visa and residence applications.
The document stipulates that the corporate income tax rate for companies and branches registered there, at the International Centre for Industry or the International Trade Centre of ZEEIM, varies between 5% (10 workers) and 2.5% (over 50 workers), while non-residents participating in the share capital of licensed entities in operation “enjoy exemption from income tax”.
Among other tax benefits, such as exemption from payment of wealth tax on the acquisition and maintenance of property, it is also provided that companies, branches established there, as well as residents, “benefit from exemption from consumption tax on the acquisition of goods for use and consumption within the tax-free zone and duty-free shops established, under the terms of the law, in the ZEEIM, whether these are value-added or special consumption taxes.
In the draft establishment agreement for “Little Africa Maio,” signed on 15 December 2020 between the government and Spanish businessman Enrique Banuelos de Castro, managing partner of IHCV, a consortium that includes several other African investors, it was planned to implement a Tourism-Residential, Cultural and Business Centre on that island, with 8,000 inhabitants and 274.5 square kilometres.
In the establishment minutes for this investment, the Cape Verdean government declared the project to be of “exceptional interest” and of “enormous national interest,” noting that it would provide the island with “first-class infrastructure, built in accordance with environmental and sustainability parameters set out in the United Nations Sustainable Development Goals.
As well as the entertainment area, considered to be the “anchor of the project,” the complex will have museums and exhibition halls for African countries, a theatre, casino, shops, congress/exhibition and business centre, hospital, international college and housing for executives and other workers.
With the first phase expected to be operational within three years, the tourism infrastructure will also include a tourist complex, called “Little Africa Resorts,” in a residential area, which will include villas for international citizens with high purchasing power.
