São Tomé and Príncipe – Binding Information: Consumption Tax. Lease Agreements.

The São Tomé and Príncipe’s Tax Directorate issued a Binding Information (dated 25^th September 2020) under Article 12 of the General Tax Code clarifying that there is no assessment of consumption tax in the case of lease agreements.

Decree-Law 35/2000, of 28 December, introduced the Consumption Tax on the provision of services. According to Article 1 on the scope of application, the provision of services is subject to Consumption Tax.

For this purpose, all operations arising from the exercise of economic activity, carried out for consideration, which do not involve the transfer of ownership of tangible movable property and which aim, among others, to carry out studies, projects, technical support services, management support, organization, development, research, construction services, repair, transport, communication, improvement, supply, accounting, auditing, and consultancy shall be considered rendering of services.

According to this Binding Information, there is no intention from the lawmaker to impose this tax on leases, since the aforementioned legal provision excludes immovable property, referring only to tangible movable property intended for the provision services in the domains therein mentions, and not excluding other domains. Leases give place to the obligation to pay, directly or through the mechanism of withholding, the respective income tax, an obligation that falls on those who receive the income, who are also obliged to issue the respective invoice and pay the corresponding stamp tax. The tenant is obliged to pay the withheld income tax if, by law, this withholding tax must take place.

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