Sunday, May 22, 2011

Tax system to get complete overhaul

Tax system to get complete overhaul

The Cuban government will completely overhaul the country's tax system,
Vladimir Requeiro, deputy chief of the Oficina Nacional de
Administración Tributaria (ONAT), announced on state TV.

The overhaul of the tax law of 1994 is occurring as the number of
self-employed Cubans is skyrocketing. As of early May, more than 300,000
Cubans were licensed to operate small businesses, up from 130,000 in
October last year, when the government began issuing self-employment
licenses. Officials announced in May that all private businesses will be
allowed to hire; however, a 313-point document outlining economic
changes outlines progressive employment taxes that increase with the
number of employees of a company.

According to the "Guidelines" document, the new businesses must pay 25
to 50 percent taxes on profits, 10 percent sales or service tax, 25
percent employment tax, and 25 percent social security contribution.

Requeiro said that tax rates will be according to income bracket, and
that agricultural producers benefit from a special tax system to
stimulate food production.

Most Cubans have never had to pay taxes. Even so, Cuban economists
expect the government to collect hundreds of millions of dollars of tax
revenues this year from private businesses.

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