The “Tax Act 113”, which replaces the former one dating from 1994 and a slew of other tax laws, introduces a total of nineteen taxes including environmental levies, social security contributions, and a sales tax.
The new tax code is designed to boost private sector growth and agricultural productivity, finance public spending and maintain a balanced budget, the Cuban government said.
State-owned businesses, which account for almost nine-tenths of all enterprises, will be subject to a 35% tax rate on profits. The new law also introduces a 25% social security tax, but this will be gradually reduced over a five-year period until it reaches 5%. Businesses with five employees or less will be exempt from this tax.
Meanwhile, a number of tax concessions will be introduced to stimulate economic activity and development, particularly for the agriculture sector.
Cuban officials have also said they had studied the tax systems of a number of other countries, including China, Vietnam, Venezuela, Brazil, Spain and Mexico, and adapted them to meet Cuba’s needs.