Cuba Moves to Attract More Foreign Investment
Cuba is in a situation in which economic growth is extremely pressing. The GDP growth for 2013 was less than expected, especially for a developing country; merely reaching 2.7%.The government has reached an agreement as of this past Saturday to lower barriers of FDI in order to boost economic growth. These policy changes include an eight year period where no taxes on profit will be placed on a companies operations. The second break is given to all investors, cut profit taxes by 15% to 50%. The only sectors investors are blocked from is healthcare and education. Another benefit is that foreigners are exempted from personal income taxes. There is a downfall for those exploiting natural resources, the tax on these are as high as 50%.
Though this is a very progressive compared to the previous 1995 foreign investment law, in order for Cuba to prosper with other developing nations, the investment needs to reach between $2-$2.5 billion and steady GDP growth rate of at least 5%.
The communistic way the Cuban government was running the country for many years simply doesn't work. Loosening barriers and lifting investment restrictions on foreign investment will continue to stimulate the economy. Since the Cuban government has taken smart steps to approach this issue they will continue to be financially rewarded through foreign investments.
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