- Title: CUBA: New income tax for the self-employed announced
- Date: 26th October 2010
- Summary: PAGE OF THE OFFICIAL NEWSPAPER ANNOUNCING AND EXPLAINING THE NEW LAWS ON WORK AND SOCIAL SECURITY
- Embargoed: 10th November 2010 04:35
- Location: Cuba
- Country: Cuba
- Topics: Domestic Politics
- Reuters ID: LVA9PD55YMEFX19PG74I1906SL4R
- Aspect Ratio: 4:3
- Story Text: Entrepreneurial Cubans began applying on Monday (October 25) for licenses allowing them to set up their own private business under a under a new tax system for the self-employed on the Communist island.
The new, tiered income tax system is part of President Raul Castro's biggest economic overhaul to date and is linked with his September announcement that he will be cutting 500,000 state jobs to save costs. The combined measures are being seen as a sign of the expansion of Cuba's tiny private sector.
A list of permitted small businesses - including plumbing, masonry, costume hire businesses, craftwork and the rental of horses - was published outside the Municipal Office for Work and Social Security as islanders queued up to register.
Cuban worker, Ceclina Oliva, came to the office to seek permission to sell pinatas, a toy typically used at parties and birthdays.
"I came to ask for a license to sell piï¿½ï¿½ï¿½ï¿½atas, in order to be more calm, relaxed, sedate, to do something and to feel useful," said Oliva.
The tax will be fixed at between 25 and 50 percent of the entrepreneur's annual net revenue. The base will be the gross income minus deductible expenses, which range from 10 to 40 percent depending on activity. Those earning less than 5,000 pesos (150 euros) will be exempt from the taxes.
The reform also permits the self-employed, for the first time, to hire workers.
Residents must bring documents to prove their identity, address and employment history in order to apply for a license.
Cuban worker, Leonard Ponce, explained the importance of the license system.
"Because if you go to work or change your place [employer] you have to apply for it [the document issued by the Municipal Office of Work and Social Security]. [Asked if that applies to the new law of reduced jobs]. I don't know, I don't know anything about that. [I have to apply] because I have started to work and they asked me for this," said Ponce.
The new tax system is a novelty in a country where even now the state employs about 85 percent of the workforce and few pay taxes.
The details of the regulations were published in the state-run newspaper, the Official Gazette, and many enterprising Cubans queued to get hold of a copy.
Although self-employment was first authorised by the Communist state in 1994, many found its harsh regulation off-putting.
Cuban worker, Eduardo De La Fe Oviedo, said he was among those who had been previously deterred by the complicated system.
"In one [publication of the official newspaper], there are things and in the other it counteracts the first. [I bought it] so I can be up-to-date on the law, because there are lots of new laws coming in for us [those applying for self-employment license] and for those who are already self-employed. This is the first opportunity that I have to obtain a license, because I have always wanted it, but as you can imagine, there are lots of hurdles," said De La Fe Oviedo.
Some details of the new system were released last week by the official press and they are being considered "friendly" by analysts.
The Official Gazette also set a sales tax of 10 percent and social security contribution of 25 percent. It also set a tax of 10 percent for those who rent homes, garages or commercial premises.
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