Tuesday, October 26, 2010

Cuba unveils more self-employment rules, hefty tax hits

Cuba unveils more self-employment rules, hefty tax hits
On Monday 25 October 2010, 22:45 EST

Cuba Monday unveiled rules for broader self-employment which it hopes
can pick up slack as the Americas' only communist government lays off
half a million state workers over six months.

The government already has unveiled guidelines for free enterprise
activities in 178 fields, as part of the plan to absorb workers to be
laid off into a larger if still marginal private sector.

Havana plans to cut the 500,000 state jobs by March 2011.

Reforms announced earlier will allow Cubans to operate a wide range of
micro businesses -- accountants, masseuses, park custodians, or even
open small fruit and vegetable stores.

But many economists have doubts that the experiment can absorb so many
former state workers.

Among rules detailed in the government gazette Monday, it was announced
that self-employed will pay a 25-50 percent income tax; a 10 percent
sales tax; 25 percent tax for hiring workers; and a 25 percent tax to
social security.

The income tax scale for these workers will run from 25 percent for an
income of 5,000 Cuban pesos (about 200 dollars) a year, to 50 percent
for those with an income over 50,000 pesos (about 2,000 dollars) a year,
the rules showed.

One novelty: self-employed people will be able to hire workers outside
their families. That will be allowed in 83 of the 178 job classes.

In theory, that opens the door to small and mid-sized businesses which
were eliminated by the communist government in 1968.

But the employer will pay steadily increasing taxes based on the number
of workers he employs to avoid concentration of wealth, the Cuban
Communist Party newspaper Granma reported.

On September 13, Cuba announced plans to slash one million state jobs,
including half a million between October and March.


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