Politics, Business & Culture in the Americas

Cuba Creates Opportunities for Small Businesses, at a Cost

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The Cuban Government published a series of small business reforms in the state-run newspaper Gaceta Oficial on Monday, that allow for the recruitment of salaried employees in several key industries. The state plans to issue 250,000 self-employment licenses, and made public a list of 178 activities that qualify as legal private-sector ventures, including private restaurants and transportation, which marks a significant shift away from the 1968 legislation that nationalized small business in Cuba.

But there’s a catch. President Raúl Castro’s cabinet also introduced a personal income tax, from 25 percent to 50 percent of revenue, small-business owners and non-governmental labor’s salaries. Cubans who make less than 5,000 pesos (US$255) per year would be exempt from the new tax. Other new taxes include a 10 percent sales tax, a 10 percent real estate tax on Cubans who rent houses, garages or stores, and increased social security contribution of up to 25 percent of personal income.

Monday’s reform is the latest measure that the Cuban government has taken to revitalize an ailing economy. On September 13, the government announced that it would lay off 500,000 state employees over six months. In what is being labeled a possible break from Cuba’s government-dominant economy. The new legislation is intended to create an opportunity for the budding private sector to absorb many of the state’s newly unemployed.

Tags: Cuba, Private Sector, Raul Castro, Taxes
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