Cuba plans big tax breaks to lure foreign investors - official media

Cuba plans big tax breaks to lure foreign investors: official media
BY MARC FRANK
HAVANA Wed Mar 26, 2014 10:12am EDT

(Reuters) - Cuba is proposing a new Cuban foreign investment law that
would cut the profits tax in half to 15 percent and exempt most
investors from paying it for at least eight years, official media said
on Wednesday.

The National Assembly will meet on Saturday to approve the legislation
that the communist country hopes will lure overseas capital and help
further integrate the Caribbean island in the global economy.

Cuba is promising legal protection for foreign investors, who have
generally been averse to risking capital in the Soviet-style economy,
and new incentives such as dramatically lowered tax. The National
Assembly is expected to approve the draft of the law with little, or no
changes.

However, foreign ventures that mine natural resources, including oil,
can be subject to a higher profits tax of up to 22.5 percent, depending
on how those ventures are negotiated with the state, according to
details published in the official Juventud Rebelde newspaper.

Under the current foreign investment law, which went into effect in
1995, all tax breaks are negotiated and foreign firms pay a 30 percent
profits tax and 20 percent labor tax, though the labor tax was already
being gradually reduced.

The new law "would apply (to investors) ... a tax of 15 percent on
taxable net profits," after which all profit could be repatriated,
Juventud Rebelde newspaper reported.

Investors will still have to hire labor through state-run companies, a
major complaint, though the hiring halls will no longer operate for
profit, Juventud Rebelde reported, indicating more money will flow back
to workers and their wages may be easier to negotiate.

(This story corrects details of tax in fourth paragraph)

(Reporting by Marc Frank; Editing by Daniel Trotta, Lisa Von Ahn and
Sofina Mirza-Reid)

Source: Cuba plans big tax breaks to lure foreign investors: official
media | Reuters -
http://www.reuters.com/article/2014/03/26/us-cuba-investment-idUSBREA2P11A20140326