Home World Americas News Cuba backs new foreign investment law

Cuba backs new foreign investment law


Cuba’s National Assembly has passed a new foreign investment law on Saturday that aims to make the Communist-run island more attractive to foreign businesses.

The law slashes taxes on profits from 30% to 15% and gives new investors eight years of exemption from paying taxes.

The change is seen as a key part of President Raul Castro’s reform package, aiming to modernize Cuba’s economy.

The government in Havana opened the country to foreign capital in 1995.

Cuba's National Assembly has passed a new foreign investment law that aims to make the country more attractive to foreign businesses

Cuba’s National Assembly has passed a new foreign investment law that aims to make the country more attractive to foreign businesses

However, in recent years, Cuba has seen a fall in foreign investment and moderate economic growth. The economy grew by 2.7% in 2013, well below the government’s 7% target.

Cuba’s economy is seen as highly centralized and inefficient, but almost 500,000 Cubans now have licenses to operate small, private businesses.

Presenting the law at a special televised session of the assembly, ministers were at pains to stress that the government was not “selling” the country but taking steps to ensure its prosperity as a socialist state.

The text of the bill has not yet been released but is expected to introduce several incentives to investment when it comes into force in three months’ time:

  • Investors will be lured into joint ventures with the state and Cuban companies
  • The process of approving foreign investment will be speeded up
  • Legal protection will aim to reinforce investors’ confidence in the Communist government
  • Taxes will be cut to 15% on profits in most areas, although special conditions will be set for investment in natural resources
  • Tax on nickel and fossil fuel investment could be as high as 50%

The reform is not expected to attract investment from the large Cuban community in the US, under the 50 year-old US economic embargo.

[youtube JLrQvVtU-bM 650]

Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.