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Hiring in Sao tome and principe

São Tomé and Príncipe is an island country in Central Africa. São Tomé is the capital and the largest city. Portuguese is the official language and Dobra is the official currency. Its economy is dependent on agriculture, farming and a small industrial sector. Its main trading partners are Netherlands, Spain, Belgium and France. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Sao Tome and Principe’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. Labor Code stipulates that employees are entitled to 26 days of annual leave. Residents are taxed on their worldwide income; non-residents are taxed on their Sao Tome and Principe-source income. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Sao Principe’s Labor Code and tax laws.

statutory labor requirements

Probation Period

  • Probation is capped at 6 months

Annual Leave

  • Employees receive 26 days of paid annual leave

Public Holidays

  1. New Year's Day (1st January)
  2. Martyrs' Day (3rd February)
  3. Labor Day (1st May)
  4. Independence Day (12th July)
  5. Armed Forces Day (6th September)
  6. Agricultural Reform Day (30th September)
  7. São Tomé Day (21st December)
  8. Christmas Day (25th December)

Maternity Leave

  • Female employees receive 60 days of paid maternity leave

Paternity Leave

  • There is no paternity leave

Sick Leave

  • Employees receive up to 360 days of sick leave

Work Hours

  • The standard work week is 48 hours over 6 days

Overtime

  • Overtime is paid at 125%

Notice Period

  • Notice period is of 1 month

Severance

  • Severance is typically a month’s salary for each year of service

13th / 14th Month Pay

  • No
  • There is no statutory requirement to pay the 13th or the 14th month salary.
  • Employees receive annual leave of 26 days at the standard rate.

 income tax

  • In general, resident individuals are subject to Personal Income Tax (PIT) on their worldwide income. Nonresident individuals are subject to PIT on income received in São Tomé and Príncipe (STP).
  • In accordance with the PIT Code, individuals’ income is divided into the following four categories: 
    • Dependent income and pensions (Category A) 
    • Business or professional income (Category B) 
    • Investment income (Category C) 
    • Capital gains (Category D)
  • Income included in Categories A and B is aggregated and subject to PIT at the progressive rates shown in the table below. 
  • The PIT Code establishes the following formula to determine annual taxable income for each tax bracket: 
    • Taxable income for bracket = (Amount from first column x rate from second column) – Amount from third column Income up to STD11,700,000 (approximately USD536.42) is exempt from tax. 
  • The following is the tax rate table.

Taxable Income (STD)

Tax Rate

Up to 11,700,000

0

Between 11,700,001

and 50,000,000

10

Between 50,000,001

and 100,000,000

13

Between 100,000,001

and 150,000,000

15

Between 150,000,001

and 240,000,000

20

Over 240,000,000

25

 

  • Nonresidents are subject to PIT on gross income derived in STP. 
  • This income is subject to a final withholding tax of 15%.

deductible expenses

The PIT Code allows the following tax deductions: 

    • Family deductions 
    • Double tax relief 
    • Health deductions 
    • Education and training deductions 
    • Property deductions (limited to STD15 million [approximately USD687.72])

Deductible Expenses

  • The PIT Code allows the following tax deductions: 
  • Family deductions 
  • Double tax relief 
  • Health deductions 
  • Education and training deductions 
  • Property deductions (limited to STD15 million [approximately USD687.72])

immigration 

  • Temporary visas may be granted to foreign citizens to engage in, among others, cultural, study, sports or business activities (to the extent that a work visa is not required for such activities).
  • A multiple-entry visa is valid for 180 days, while the single-entry visa is valid for 30 days.
  • No specific work visa is issued in STP. 
  • Foreign citizens must obtain a residence visa to be able to work in STP (either as dependent or independent workers).
  • On request, yearly residence visas may be granted to foreign citizens. 
  • After final approval, the residence visa is valid for one year, with the possibility of renewals for equal periods.

Type of Permit/Visa

Documentation

Validity

Eligibility

Tourist Visa

  • Valid passport
  • Passport size photos
  • Completed visa application form

30 days (single entry);

180 days (multiple entry)

  • Foreigners seeking to visit STP for tourism purposes must obtain a tourist visa

Residence Visa

  • Valid passport
  • Passport size photos
  • Completed visa application form
  • CV
  • Academic qualification
  • Employment Contract

1 year

  • Foreigners seeking to visit STP for employment must obtain a residence visa

value added tax

  • Finance Minister Osvaldo Vaz stated the VAT Code bill, which will come into force in January 2021, aims to modernize the São Tomé tax system and will be operated exclusively on a computer platform, in line with IMF and World Bank recommendations.
  • The proposed standard VAT rate is 10%

VAT

Standard Rate

10%

withholding tax

Withholding tax rates are as follows: 

WHT

Dividends

10%/15%

Interest

10%

Royalties

10%

Technical Services Fees

15%

 termination 

  • Notice period is of 1 month
  • Severance is typically a month’s salary for each year of service

statutory benefits

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period.
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Annual Leave

Public Holidays

Maternity Leave

Paternity Leave

Sick Leave

Overtime Pay

Notice Period

Social Security Benefits

payments and invoicing

  • Income included in Categories A, B (only Group 2) and D (if the individual chooses to aggregate this income) must be declared through the submission of a tax return by the end of February of the following year. 
  • Income included in Group 1 of Category B must be declared by the end of April of the following year. 
  • The following individuals are not required to file a tax return: 
    • Individuals who only received income included in Category A that is subject to withholding tax from a single entity 
    • Individuals subject to the final withholding tax rate 
  • The tax payable, reduced by withholding tax, must be paid by the end of September of the year in which the return is submitted. 
  • In accordance with the provisions of the CIT Code, individuals with income in Category B are required to make three advance payments (in June, September and December), in an amount corresponding to 75% of the tax payable for the preceding year. 
  • These advance payments may be waived in certain conditions. 
  • Any excessive advance payments result in a refund at the end of the year.

ease of doing business

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank Sao Tome and Principe ranked 170th in the World in 2019 in terms of ease of doing business

employee accruals

   
Christmas Bonus%

0%

Christmas Bonus Over Vacations %

0%

Severance per Year %

Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary)

Vacations % Employees are entitled to 14 days of annual leave (4.12% of annual salary)
Notice %

Employees are entitled to a 1 month of notice period for one year of service or more (8.33%)

Christmas Bonus Over Notifications% 0%
Vacations Plus% 0%
Total percentage of Salary (yearly) The total employment accruals as a percentage of salary per anum are equal to 20.78%

employer accruals

Additional information (Country Accruals)

   
Social security 6.00%
Vacations 9.32%
Description Coverage Employed persons, including civil servants and military personnel; and household workers.Exclusions: Self-employed persons

Employer Accruals Additional information

    Employment Accruals
Annual Leave Employees receive 26 days of paid annual leave This equals 7.12% (26/365 days) of annual income
Maternity Leave Female employees receive 60 days of paid maternity leave This equals 16.4% (60/365 days) of annual income
Sick Leave Employees receive up to 360 days of sick leave This equals 98.6% (360/365 days) of annual income
Overtime Overtime is paid at 125% Subjective
Severance Severance is typically a month’s salary for each year of service This equals 8.33% (1/12 months) of annual income
Social Security Social security contributions are payable on gross income at a rate of 14% (8% for the employer and 6% withheld from the employee). This equals 14% of annual income

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