Havana: A new Cuban foreign investment law to be passed this week will let companies keep earnings tax-free for eight years, state media reported Wednesday.
"Companies that partner with the state in mixed enterprises will be exempted from taxes for the first eight years after they are set up" and the Council of Ministers can consider extending the privilege, the daily Juventud Rebelde (Rebel Youth) said.
The text of the bill, to be passed by the National Assembly Saturday, has not been released or published.
Once the tax privilege ends, corporate earnings will be taxed at 15 percent, the report added. Current laws allow corporate taxes of up to 30 percent.
The new law, aimed at attracting corporate partners to Cuba`s Soviet-style overwhelmingly centralized economy, may take time to generate investor confidence. In the 1960s, President Raul Castro`s brother Fidel`s government nationalized all foreign-owned businesses in Cuba and never compensated for billions of dollars in claims.
Taxes on "exploitation of natural resources, renewable and nonrenewable, may be as high as 50 percent" as decided by the council, the report said.
That is important because Cuba is believed to have vast oil resources off its north coast, for which it needs partners to tap into.
If it succeeds, the Americas` only communist regime could go from a cash-poor developing nation to a flush oil exporter in short order, safeguarding one-party rule for years.
So far, the Cuban government has refused far-reaching economic reforms, and any political reform.
Cuban authorities have said they want to target high-tech businesses, particularly in food production, biotech and information technology in their quest for outside investment.