São Tomé & Príncipe VAT
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São Tomé and Príncipe applies a value-added tax known as Imposto sobre o Valor Acrescentado (IVA) at a standard rate of 15%. The IVA was introduced as part of fiscal modernization reforms in this small island nation in the Gulf of Guinea. As a Portuguese-speaking country, São Tomé uses the Portuguese-language term IVA. The relatively moderate 15% rate reflects the country's small economy and the need to balance revenue generation with affordability. Certain essential goods and services are exempt from IVA, including basic food products, medical and pharmaceutical services, educational services, and financial transactions. Exports, including cocoa (the country's primary export), are zero-rated. The Direcção dos Impostos administers IVA collection. Given the small size of the economy, the registration threshold is relatively low. IVA returns are filed periodically as prescribed by the tax authority. São Tomé and Príncipe's economy is heavily dependent on cocoa exports, foreign aid, and tourism, making IVA an important source of domestic revenue. As an import-dependent economy, IVA collected on imports constitutes a significant share of total IVA revenue. The government has been working with international partners to strengthen fiscal institutions and improve tax compliance.