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Cuba to Give Tax Breaks as it Allows Full Foreign Ownership

By Eric Sabo and Charlie Devereux

Although tax breaks may provide incentives for foreign investors, many may still be cautious to enter the Cuban market, points out AS/COA’s Christopher Sabatini.

Cuba plans to allow for full foreign ownership of companies and cut taxes for overseas investors in President Raul Castro’s latest bid to open up the communist island’s economy and bolster growth.

Cuba’s National Assembly will consider the legislation targeting development of non-renewable resources, construction, agriculture, hotels and services on March 29, state-run Juventud Rebelde reported yesterday on its website. The proposal traces its roots to a 1995 government-backed study on opening the economy, the newspaper said....

U.S. Embargo

Petroleo Brasileiro SA and Spain’s Sol Melia SA are among companies that have already invested in Cuba, gaining opportunities over U.S. competitors barred from doing business there because of a five-decade-old American trade embargo. Brazilian construction company Odebrecht SA is working on a $900 million effort to modernize Cuba’s Mariel port, while Toronto-based Sherritt International Corp. mines nickel and is the island’s biggest independent energy producer.

Although tax breaks may provide incentives for foreign investors, many will still be cautious about entering a market where they have no control over the hiring of personnel, said Christopher Sabatini, senior policy director at the Council of the Americas. Current legislation doesn’t allow companies to vet staff for their suitability or to reward good work, he said.

“Despite the clear flexibility on ownership and lowering of tax breaks, the ongoing requirement, even if made more flexible, of hiring through the state is still for many businesses a huge stumbling block,” Sabatini said....

Read more of this article here.

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