Cuba Formalizes Tax Holiday For Foreign Investment In Mixed-Ownership Ventures

Cuba Formalizes Tax Holiday For Foreign Investment In Mixed-Ownership
Ventures
Published April 16, 2014Fox News Latino

HAVANA – Cuba's government on Wednesday published the text of a new law
that seeks to make it more attractive for foreign investors to bring
badly needed capital to the island. It will take effect in late June.

The law was approved by parliament and the broad outlines of its content
were aired in state media. The text is now publicly available after
being published in the government's Official Gazette.

Havana is betting that the measure will make the country more attractive
to the business community and bring in more foreign investment, which
has been flat including in the years since President Raul Castro began a
program of economic reforms.

The measure, which was approved last month, includes tax breaks for new
investments and property guarantees for investors, and also outlines
arbitration procedures and labor rules for foreign-financed projects.

Investments in mixed-ownership projects or in tandem with independent
cooperatives will enjoy a tax holiday for the first eight years of
operation and pay 15 percent on profits after that — about half the
current rate. Such operations will also be exempt from payroll taxes.

However projects that are funded completely by foreign capital do not
automatically qualify for those breaks, unless they are granted an
exemption by the government. Also, the law specifies that the profit tax
could be as high as 50 percent for firms involved in natural resource
development.

It also states that, excluding management positions, the hiring of Cuban
citizens and residents must be done through an employment agency, which
will recruit and select workers, negotiate salaries with the foreign
investors and be in charge of paying Cuban workers.

The law allows for investors to work with independent cooperatives, but
does not establish a mechanism for the same to happen with the small
private sector that has been budding under Castro's reforms.

Cuba must attract between $2 billion and $2.5 billion in foreign direct
investment annually to ensure the sustainability of its socialist
economic model and the success of recent market-oriented reforms,
according to Cuban government estimates.

The AP and EFE contributed to this report.

Source: Cuba Formalizes Tax Holiday For Foreign Investment In
Mixed-Ownership Ventures | Fox News Latino -
http://latino.foxnews.com/latino/politics/2014/04/16/cuba-formalizes-tax-holiday-for-foreign-investment-in-mixed-ownership-ventures/