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