Cabo Verde Payroll
When you expand your business to a new country, payroll practices and taxes may look different. Globalization Partners offers payroll outsourcing to help you navigate these new laws in Cabo Verde and over 180 other countries.
Reading Time: 3 minutes
When you expand your business to a new country, payroll practices and taxes may look different. Globalization Partners offers payroll outsourcing to help you navigate these new laws in Cabo Verde and over 180 other countries.
Taxation Laws
Your payroll practices will include compliance with the country’s taxation laws. Income tax operates on three percentage levels according to annual income, and employers deduct these taxes from employee paychecks. The progressive tax rates are:
- 16.5 percent for CVE 0 to 960,000
- 23.1 percent for CVE 960,000 to 1,800,000
- 27.5 percent for CVE 1,800,000 or more
Salaries, bonuses, allowances, commissions, pensions, and benefits are all subject to these withholding taxes. These monthly deductions act as final taxation unless an individual chooses to file annually. In this case, withholding tax acts as an advance payment.
Employers are also responsible for deducting contributions to the National Social Insurance Institute. Social security funds cover sickness and maternity benefits, old age, disability, and workman’s compensation. Employees contribute 8 percent of earnings to the fund, and employers contribute 15 percent.
Cabo Verde Payroll Options
As an employer, you’re required to handle payroll. Your international payroll practices will depend on your company resources and how much legal responsibility you’re willing to take. Some of your company’s options include:
- Internal payroll processing: When you have an established entity in the county, you can create an internal payroll department. This arrangement gives you complete control, but it requires extensive resources to develop. It may not be an ideal option for businesses starting expansion.
- Payroll processing company: Working with a processing company gives you access to professionals who are more familiar with local payroll laws. While they may have more expertise, your company will be liable for any mistakes they make.
- Remote processing: Handling payroll remotely is an option for businesses with limited resources. Relying on your payroll department at home will require a clear separation between international and local payroll practices. If you fail to meet regulations abroad, your parent company will be responsible for legal damages.
- Globalization Partners: As your Employer of Record, we’ll hire your employees through our entity and place them on our payroll. Our legal experts ensure payroll is compliant, and legal concerns are entirely our responsibility.
How to Set Up Cabo Verde Payroll
If you want to create an internal payroll department, you’ll need to establish a subsidiary in the country first. This process requires time, money, and government clearances to complete. Once you have an official business, you can find and hire payroll professionals for your dedicated department.
Setting up payroll for your employees involves registering with the proper authorities. You’ll need tax IDs and social security numbers to deduct income taxes and contribute to the National Social Insurance Institute.
Termination and Entitlement Terms
Termination can be a mutual agreement between both parties, or either party can initiate it. Severance is only required in certain circumstances.
An employer can incite collective dismissal by terminating two or more employees for redundancy, company closing, or economic reasons. In this instance, employers must pay severance to every terminated employee. Severance should be equal to one month’s pay for every year of service.
Objective dismissal is also grounds for severance. Reasons for objective dismissal of an employee include:
- Incapacity to perform duties
- Extinction of position
- Incapacity to perform work after organizational changes and training
The severance rate for objective dismissal is less than one month’s pay for every year of service. Employers can decide the rate within that regulation. Regardless of termination type, employees are entitled to cash out unused vacation days.
Choose Globalization Partners for Payroll Outsourcing
Globalization Partners offers legal expertise to streamline your payroll processes abroad. Get in touch with us today to learn more.