(Reuters) - Cuba’s National Assembly on Saturday unanimously approved a new foreign investment law that the communist-run country hopes will attract badly needed capital, improve growth and create jobs.
Accompanying regulations, which may differ from previous rules, will not be published for 90 days.
Following are some differences between the current and the new law, and a summary of what remains unchanged.
CURRENT LAW: Negotiations with Cuban authorities go through various steps with no time limit until a proposal reaches the Council of State or Council of Ministers, at which point the two bodies have 60 days to approve or reject.
NEW LAW: Some minor ventures approved at the ministerial level within 45 days. Larger ventures still must go through the more lengthy process of passing the Council of State or Council of Ministers.
CURRENT LAW: Profits taxed at 30 percent and use of labor at 25 percent (11 percent for the right to use a worker and 14 percent for social security).
NEW LAW: Cuts profit tax in half to 15 percent and eliminates the labor tax.
CURRENT LAW: Profits from mining, oil and other raw material ventures can be taxed at higher levels, up to 45 percent.
NEW LAW: Taxes on profits in mining, oil and other raw material ventures are limited to 22.5 percent.
CURRENT LAW: Any tax breaks for investing in Cuba are negotiated.
NEW LAW: Investors are exempted from paying a profit tax for eight years upon the signing of an agreement.
CURRENT LAW: Investors are subject to income tax.
NEW LAW: Investors are exempted from income tax.
CURRENT LAW: Allows for 100 percent foreign ownership, but in practice the government rarely if ever approves permits for wholly owned foreign groups.
NEW LAW: Also allows for 100 percent foreign ownership but denies those companies the same tax benefits afforded to joint ventures with the Cuban state or associations between foreign and Cuban companies.
CURRENT LAW: Does not specifically exclude Cubans living abroad, but in practice they are not allowed to invest.
NEW LAW: Does not specifically exclude Cubans living abroad. Official media reports say a foreign investor will be any person or corporation with a foreign address and capital, and that the government will actively exclude political opponents from the Cuban exile community in Miami.
CURRENT LAW: Only state-run companies are authorized to form ventures with foreign investors.
NEW LAW: In addition to state-run companies, private farm and non-farm cooperatives authorized to form ventures with foreign investors.
Under the proposed new law, the following remain basically unchanged from the 1995 legislation, although this could change upon publication of accompanying regulations.
Disputes are to be settled by Cuba-based arbitration unless specified otherwise in agreements.
Joint ventures and other forms of association must hire labor through state-run companies, paying agreed-upon wages in convertible currency. The hiring organization then pays Cuban workers in the local peso and handles labor disputes.
Companies must use Cuban citizens and residents for all positions, with the exception of high-level management.
Companies may import and export directly, bypassing the state’s cumbersome trading companies.
The Mariel Special Development Zone retains its tax laws, which are even more favorable than those in the proposed new law. Investors in Mariel will also benefit from other provisions of the new law.
Reporting by Marc Frank; Editing by Daniel Trotta and James Dalgleish