Despite the communist Castro dictatorship’s claims that they want to spur the private marketplace to mitigate the disastrous effects of its socialist economic policies, they are still targeting entrepreneurs. While foreign investors continue to enjoy incentives, Cuban-owned businesses on the island are being hit with punitive measures. This is socialism in action.
Cuban independent journalist Rafaela Cruz explains in Diario de Cuba:
Socialist Cuba: No Country for Entrepreneurs
The numerous incentives granted to foreign investors a decade ago are still in force, while those for the private sector did not last even three years.
There have only been MSMEs in Cuba for three years, and they have already been stripped of the few fiscal incentives the Castroist gods deigned to grant them.
Some time ago they withdrew the two most important ones (broad corporate purposes and tax exemptions in the first year) but now they have taken from them the very few and reduced inducements for entrepreneurship that they still had:
1. The simplified tax regime, which made it easier for small-scale freelancers (cobblers, darners, miscellaneous repairmen, gardeners) to avoid having to hire tax advisors. Now they will all be governed by a single general tax regime for non-state economic actors.
2. Exemption from the payment of personal income tax on dividends obtained in the first year of operation.
3. Exemption from the payment of tax for the first three months for self-employed workers.
And that’s the list, because that’s how paltry and insignificant the benefits were that Castroism offered to Cuban entrepreneurs, whom it chews up, but does not swallow. Meanwhile, for foreigners the list of beneficial terms is, to put it mildly, a bit longer, and with more generous concessions…
1. Total exemption from personal income tax.
2. Exemption from income tax for a period of eight years, which may be extended.
3. A tax rate of 15% on net taxable profit.
4. Exemption from tax on net profits, or other authorized benefits, in order to reinvest
5. Wholesale sales tax reduced by 50%.
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