Cuba’s New Foreign Investment Law Takes Effect
HAVANA TIMES — The new investment law Cuba has passed to draw capital to the island and refloat its economy came into effect this past Saturday, DPA reported.
Cuba’s Foreign Investment Law, unanimously approved by the country’s Parliament at the close of March this year, opens up broad sectors of the nation’s economy to foreign capital.
Among other things, it also offers potential investors tax prerogatives, such as a profit tax cut anywhere from 15 to 30 percent and tax exemptions for hired personnel.
According to official declarations made during the parliamentary assembly of March 29, Cuba hopes to secure direct foreign investment of up to 2.5 billion dollars a year with this new law.
The foreign investment law replaces a legislation that had been in effect in Cuba since 1995, when the island began to open sectors of its economy, particularly tourism, to foreign capital. Cuba has been suffering a chronic economic crisis since the early 90s, following the collapse of the Soviet Union, once its main commercial partner.
The new law also affords Cuban émigrés the opportunity to invest, either as individuals or members of organizations. The potential inflow of capital arising from Cubans living in the United States, where 85 percent of all Cuban immigrants live, will be significantly reduced by the effects of the economic embargo that Washington has maintained for over 50 years.
The law does not however envisage the possibility of having Cuban citizens living on the island invest as individuals and only authorizes domestic investments in the form of entities (State companies).
The legislation also maintains current restrictions on the hiring of personnel by foreign investors, to be carried out indirectly via State “employment agencies.”
Wage payments will also be subject to an ad-hoc exchange rate that shall be applied to the Mariel Free Trade Zone, some 40 kilometers west of Havana. The rate for exchanges between Cuban Pesos (CUP) and Cuban Convertible Pesos (CUC) will be lower than the country’s official rate and will significantly reduce salaries paid in CUP.
Well said!
Having just put current foreign investors in jail – for corruption – ie: making additional payments to staff, the regime hopes to persuade other foreign capitalists to “invest” in Cuba. Not many countries have the gall to seek foreign investment and then jail those foolish enough to do so. A word of advice to any company considering succumbing to Raul Castro Ruz’s wishes: It’s your money he’s after not your abilities. Judge him properly by considering his international friends: Bashar Asad, Robert Mugabe, Kim Yung Un, Vladamir Putin, Nicholas Maduro – what a nice bunch to meet on a dark night.
There is a new provision which allows 100% foreign ownership. However, “ownership” does not include the land and there is no guarantee of due process if there is a dispute between the foreign owner and the State.
If Raul Castro wants to see Cuba prosper he has to let go of it. Either he loves it or he want to possess it.
The investment works like this; I buy equipment, I pay for transportation to harbor, I pay for shipping to Cuba, I pay for transportation to location for use in Cuba. THEN Cuba takes 51% or more of company ownership, they hire ???? to run equipment, they charge me XXXX dollars for operator and pay operator a mere fraction of what they have charged me. I do have the total and absolute freedom to pay, pay and pay some more, but absolutely no control in how company is run. Should I expect a return on my investment of several hundred thousand dollars, in Cuba, NOT.
Still not going to work, just a different shade of the same color. Was interested and have tried before, my money and they control, not going to happen. “Employment agencies” skim artists at their finest.