Investment policy

Agribusiness

CONTEXT

The investment policy in São Tomé and Príncipe is established by an investment code formulated under Decree Law No. 19/2016. This code serves as a primary guideline for investors and companies intending to establish operations within the country. It delineates the terms, conditions, modalities, guarantees, and incentives associated with investments in the Democratic Republic of São Tomé and Príncipe. Below, we will outline some of the key articles of the investment code for your reference. However, it is advisable for those considering São Tomé and Príncipe as an investment destination to seek further information to fully understand the regulatory framework.

Investor and FDI Concept - Article No. 3

Point (c) of this article defines an Investor as any individual or legal entity, regardless of nationality, that engages in or has engaged in investment activities under the applicable laws of the country. Furthermore, paragraph (e) in the same article characterizes Foreign Direct Investment as any form of capital contribution that can be quantified in monetary terms. Such contributions must be derived from the investor's resources or undertaken at their own risk, originate from abroad, and be intended for integration into an investment aimed at the implementation of an economic activity project through a commercial entity that is registered in São Tomé and Príncipe and operates within the national territory.

Investment Regimes - Article No. 9

Point (c) of this article also outlines the investment regimes that establish a framework for providing tax benefits associated with investments made following the Investment Code. The regimes are categorized as follows:
a) Simplified Regime;
b) General Regime;
c) Special Regime.

Simplified Regimes - Article No.10

Article No. 10 delineates the types of investments that qualify for the simplified regime. It specifies that investments, as defined in Article 3, with a total value ranging from 50,000 Euros to 249,999 Euros are classified under this simplified regime.

Access Conditions - Article No.13

Article No. 13 delineates the conditions requisite for access to investment project incentives under the Tax Benefits Code.

To qualify for these incentives, promoters must fulfill the following criteria:

a) Maintain a minimum availability of twenty percent (20%) of the required capital;

b) Demonstrate a stable economic and financial condition suitable for executing the project;

c) Submit a certificate indicating no outstanding debts with the State and Social Security;

d) Provide an acceptable feasibility study of the project, which must illustrate the creation of permanent employment opportunities, the utilization of national labor, and a commitment to social responsibility;

e) Deliver a comprehensive report that analyzes and articulates the economic impact of the proposed investment on the country.

Equal Treatment - Article No.14

This article outlines the treatment afforded to investors under the provisions of the Constitution and the foundational principles that define the legal, political, and economic framework of the country. The state of São Tomé guarantees, irrespective of the origin of the capital, equitable, fair, and non-arbitrarily discriminatory treatment for incorporated companies, businesses, and patrimonial assets. This provision ensures their protection, security, access to legal avenues and recourse, while also safeguarding their management, maintenance, and utilization.

Common Guarantees - Article No.15

(1) The Government of São Tomé and Príncipe ensures that all investors have access to the judicial system of São Tomé for the protection of their rights, with a guarantee of due process in accordance with the law.

(2) If assets associated with an investment project are expropriated or requisitioned for significant and duly substantiated public interest reasons, the Government shall provide for the payment of fair, prior, and effective compensation, the amount of which will be determined in accordance with the applicable legal framework.

(3) The Government shall guarantee the protection and confidentiality of professional, banking, and commercial information about companies and enterprises established for private investment, in compliance with the law.

(4) The rights conferred upon private investments under this legislation shall be upheld without prejudice to the rights arising from any agreements or conventions to which the Government of São Tomé and Príncipe is a signatory.

(5) The right to directly import goods from international markets and to independently export products produced by investors shall be guaranteed, subject to the relevant customs regulations and internal market protection rules.

Transfer Of Profit And Dividends - Article No.18

1. Following the implementation of the investment project and upon verification of its execution in accordance with the provisions of this law and the stipulated terms and conditions of the respective authorization, the right to transfer funds abroad is assured under the applicable foreign exchange regulations. This includes:

a) Dividends or distributed profits, contingent upon the verification and certification of the payment of applicable taxes, taking into account the amount of capital invested relative to the corresponding equity holdings in the company or firm;

b) Proceeds from the liquidation of investments, inclusive of capital gains, subsequent to the payment of applicable taxes;

c) Any amounts owed, after accounting for the relevant taxes, derived from acts or contracts that, under the provisions of this law, qualify as private investments;

d) Royalties or other forms of remuneration associated with indirect investments related to technology transfer.

2. The stipulations outlined in the Tax Benefits Code, with necessary adjustments, facilitate the effective transfer of profits and dividends.

General Investor Duties - Article No.19

Investors are mandated to comply with this law, as well as any other applicable legislation and regulations in effect within the Democratic Republic of São Tomé and Príncipe. In addition to fulfilling their contractual obligations, investors are subject to the penalties specified within this legal framework.

Specific Duties Of The Investor - Article No. 20

The investor is obligated to:

a) Adhere to the deadlines established for the importation of capital and the execution of the investment project, in accordance with the commitments undertaken;

b) Facilitate the training and integration of the São Toméan workforce, ensuring adherence to fair wage distribution criteria and specific working conditions, thereby avoiding any differentiation between national and expatriate workers with equivalent academic qualifications and levels;

c) Uphold the principles of equality and non-discrimination, refraining from any acts or actions that may constitute discrimination based on race, gender, or physical disability;

d) Fulfill all tax obligations and other mandatory contributions and fees as prescribed by law, while not undermining any tax benefits for which the investor may be eligible;

e) Implement the chart of accounts and accounting standards established by legislation;

f) Abide by the current environmental protection regulations;

g) Adhere to the regulations concerning the hygiene, protection, and safety of employees against occupational illnesses and workplace accidents, in accordance with the prevailing legislation and other provisions outlined in the social security laws;

h) procure and maintain current insurance coverage for workplace accidents and occupational illnesses affecting employees, as well as civil liability insurance for damages inflicted on third parties or the environment.