Cuba Offers Tax Cuts for Foreign Investment
April 1, 2014 Taxation in Cuba
HAVANA – Cuba is opening its doors to foreign businesses and investors with a slew of tax cuts meant to entice more enterprises to start working in the county.
Over the weekend the National Assembly of Cuba voted on and approved new legislation regarding the treatment of foreign investments coming into the country, significantly lowering the tax burden faced by overseas entrepreneurs operating or setting a business in Cuba.
The new rules are intended to cumulatively ease the process of establishing a business in Cuba, with a specific emphasis on increasing assurance for new investment applications, and decreasing overall tax obligations faced by these enterprises.
The most significant tax change being touted by the government is a 15 percent cut to the current 30 percent rate of profit tax, and a complete waiver of the current 11 percent labor tax and the 14 percent social security contribution paid by any foreign business taking on local workers.
Businesses involved in the extraction and refinement of oil or minerals will also enjoy a new industry specific tax cut, now facing a tax on profits of 22.5 percent, compared to the previous rate of 45 percent.
In an effort to ease the administrative requirements of investing into Cuba, especially in the agricultural sector, the government has streamlined the business application process, and opened the doors for local private farms and non-farm cooperatives to launch joint ventures with foreign investors.
Explaining the urgency and need for the new laws regarding attracting overseas funds, the Foreign Investment and Trade Minister Rodrigo Diaz “…we cannot develop if the economy does not grow at around 7 per cent per year and we do not accumulate 25 to 30 per cent of that to invest,” and in order for this goal to be achieved Cuba needs to draw at least USD 2 billion in foreign investment every year.
Photo by: Rinaldo Wurglitsch