Cuba Reports Crackdown on Tax Evasion

By Daniel Benitez  (Cafe Fuerte)

HAVANA TIMES — According to government reports, a total of 223 cases of tax evasion by people who are self-employed were sent to Cuban courts, and if found guilty, they could be sentenced to up to 8 years in prison.

The National Tax Administration Office of Cuba (ONAT) presented the charges before the courts, which are processing the cases and have already handed out sentences to numerous suspects, ranging from 2 to 5 years in prison, in accordance with the institution’s legal director, Sonia Fernandez.

In order to counteract the crime of tax evasion, the ONAT has been joined by the National Revolutionary Police, which has taken part in 136 out of 223 accusations, according to statistics provided by the Trabajadores (Workers) newspaper.

Affidavits

Created in 1995, the ONAT is now responsible for processing affidavits about the personal income of those self-employed workers who earn over 2,500 Cuban pesos (CUP), approximately $100 USD, per month, who have a 3% tax rate.

Some of the main offenses which defendants commit include: reporting monthly income below their real monthly income; the under-declaration at the end of each fiscal year; not filing a tax return, or not updating changes in their address.

Fernandez also noted that “over 300 actions [were applied] against those who illegally practice being self-employed, which involves the estimated time period of work and the corresponding fines with the utmost rigor.”

She noted that once a file had been open for tax evasion, even though suspects pays the sum of the alleged debt, the penal process against them doesn’t end, and the person can end up in jail.

For example, at the ONAT office in the capital’s Arroyo Naranjo municipality, over 4 million regular pesos (CUP) were collected in tax debts and four out of seven cases waiting for a hearing have already settled a sum they owe, but they will still have to appear before the courts regardless.

Violations and fines in Sancti Spiritus

A report about the situation in Sancti Spiritus province meanwhile claimed that thousands of fines had been applied to private workers.

Selling homemade industrial products, using raw materials bought on the black market and trading at non-authorized places were some of the main violations which Sancti Spiritus self-employed workers committed, and which resulted in fines worth 2.274.000 CUP.

During 2016, Sancti Spiritus tax inspectors carried out 4.807 tax revisions, where they detected violations in over half of the cases and applied heavy fines.

The municipalities with the highest number of offenders of the rigorous laws which regulate non-governmental work were concentrated in the provincial capital and in the touristy municipality of Trinidad.

The report states that out of the 24,526 self-employed workers in Sancti Spiritus, 15,868 formed part of some government sanctioned local union, which need “to be the key place to analyze and draw out effective strategies which seek to get rid of the cracks which damage its activities.”

However, in spite of the large amount of fines being given out to those who break these regulations, Cuban authorities seem to also be waging a war against those who have their paperwork in order.

There is also a selective persecution of those who comply with the law, Juana Salome, who rents out rooms, told Juventud Rebelde newspaper.

The report specifies that, in the last six months of 2016, almost 900 people in Sancti Spritus lied on their tax declarations to hide their real income.

Nationwide, over 200,000 workers will have to file their affidavit in 2017, 170,000 of whom are self-employed, which represent 33.7% of those who don’t directly work with a state-run company.

According to statistics from the Ministry of Labor and Social Security, just over 535,000 people are self-employed in Cuba [population 11.2 million].

In spite of the slight opening in what is called the non-governmental sector, conditions to develop private work still haven’t been created as wholesale markets don’t exist and the authorities insist on using a complex bureaucratic apparatus which discourages those who want to get their license.