Cuba to Clamp Down on Private Sector Tax Evasion

Food service is one of the most widespread areas for self employment in today’s Cuba. Photo: Juan Suarez

HAVANA TIMES — Cuban authorities plan to reinforce controls in 2015 against tax evasion in the private sector, reported dpa news after a meeting of the Council of Ministers on Friday.

The government’s plans for 2015 call for a crackdown on evaders and taking a close look at the books of owners of private housing rentals (casas particulares), very popular among tourists, as well as go after people practicing unauthorized work. The announcement was reported Monday in the official Granma daily.

“In 2015 several measures to strengthen controls over indiscipline as underreporting of income from sales and services by the self-employed, especially in housing rentals, should be adopted” explained Granma.

The government will also be seeking to detect unreported employees as well as “tax evasion on land transport” and the “illegal exercise of economic activities”.

Some 476,000 licenses have at one time been taken out in recent years to work as self-employed, according to the latest figures presented by Economy Minister Marino Murillo, also in charge of the committee that supervises the market reforms. No figures have been released on how many small business people and other self-employed have turned back in the licenses after failing.

In recent years, the government of Raul Castro opened up a total of 201 low-skilled forms of employment in the private sector. Professionals were not included, as they are only allowed to work in their field for the State.

The opening to private initiative has yet to have a significant impact on macroeconomic figures. However, it has changed the living conditions of the more successful small business people who some consider part of a new Cuban middle class.

Much of the private sector is concentrated in the fields of food service or room or house rentals to tourists, as well as in transportation including trucks and taxis. The government of Raul Castro hopes to gradually reduce the state payroll, including the least profitable state-run businesses, whose employees have the alternative to form a cooperative to continue working.

3 thoughts on “Cuba to Clamp Down on Private Sector Tax Evasion

  • Corruption is in the view of the State, the perogative of the little guy. “Let’s stamp on him.”

  • A frequent complaint by “cuentapropistas” or small business owners is that they don’t see the benefit of their tax payments. In fact, most believe that before there were taxes being collected, the roads were better, the hospitals were better, the schools, the stores, etc. From their perspective, even as taxes go up and more taxes collected, conditions in Cuba continue to worsen. The only visible change is that the ruling class seems to live better and travel more. So what’s the point?

  • I suspect this will have the same level of efficiency and productivity as everything else the Cuban government manages. Who knows, they may lower the bar even one notch more by spending more than they collect in a country where tax evasion is rampant.rampant..

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