Table 1:

Cuba: Registered Micro-enterprise Self-Employment

Dec. 1994

Dec. 1995

March 1996

January 1998

Approved and Registered

169,098

208,786

206,824

159,506

Total Applications for

Registration

248,552

390,759

439,268

(268,295)

Applications Rejected

10,675

11,519

12,665

} (108,789

Applications Withdrawn

64,586

148,491

195,023

Applications in Process

4,193

21,963

8,789

Source: Ministerio de Trabajo y Segundad Social, and CEPAL (1997)

n.a.

Table 2:
Taxation Rates for Gastronomic Services:
Monthly Lump-Sum (Cuota Fija) Payments
NATIONAL
ECONOMY
Pesos

TOURIST
SECTOR
$ US

(a) Food and Drink Vender (al detalle)

CuP 100.00

(b) Food Vender from Home

200.00

$ US 100.00

(c) Private Restaurants (Paladares)

400.00

300.00

(d) Alcoholic Beveridge Sales at Private

Restaurants

100.00

100.00

(e) Tax for Required Minimum Two

Employees at Private Restaurants

120.00

120.00

Source: Ministerio de Trabajo y Seguridad Social y de Finanzas y Precios, Resolucin

Conjunta No. 4/95, Granma, 14 de junio de 1995.

Table 3:

TAX SCALES APPLIED TO PERSONAL INCOME

PESO SCALE
Tax Bracket

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)

0 - 3,000
3,000 6,000
6,000 12,000
12,000 18,000
18,000 24,000
24,000 36,000
36,000 48,000
48,000 60,000
60,000 and over

TOTAL

US DOLLAR SCALE

Tax Rate % Tax Payment

5%
10 %
15 %
20 %
25 %
30 %
35 %
40 %
50 %

--

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)

_______

Tax Bracket

Tax Rate %

0 - 2,400
2,400 6,000
6,000 9,600
9,600 13,200
13,200 18,000
18,000 24,000
24,000 36,000
36,000 48,000
48,000 60,000
60,000 and over

10 %
12 %
15 %
20 %
25 %
30 %
35 %
40 %
45 %
50 %

TOTAL

--

Tax
Payment

______

Source: ONAT, Declaracin Jurada, Impuesto sobre Ingresos Personales, Moneda Nacional, 1997, p. 1.,
Ministerio de Finanzas y precios, Instrucin No. 11/96, Declaracion Jurada, Divisas, 1996.

TABLE 4:

Calculation of Tax Rates for True Net Income for Various

Levels of Purchased Inputs (or Net Value Added)

A. With c as Purchased Inputs as % of Gross income

Tax Brackets in terms of True Net Income
Tax Rate for True
(Pesos)
Net Income
From
To
(a)
3,000 x (1-c)(-1) 0.9 0.05 x (1-c)(-1) 0.9
(-1)
(b)
3,000 x (1-c) 0.9 6,000 x (1-c)(-1) 0.9 0.10 x (1-c)(-1) 0.9
(c)
6,000 x (1-c)(-1) 0.9 12,000 x (1-c)(-1).9
0.15 x (1-c)(-1) 0.9
(-1)
(-1)
(d)
12,000 x (1-c) 0.9 18,000 x (1-c) .9
0.20 x (1-c)(-1) 0.9
(-1)
(-1)
(e)
18,000 x (1-c) 0.9 24,000 x (1-c) .9
0.25 x (1-c)(-1) 0.9
(f)
24,000 x (1-c)(-1) 0.9 36,000 x (1-c)(-1).9
0.30 x (1-c)(-1) 0.9
(-1)
(-1)
(g)
36,000 x (1-c) 0.9 48,000 x (1-c) .9
0.35 x (1-c)(-1) 0.9
(-1)
(-1)
(h)
48,000 x (1-c) 0.9 60,000 x (1-c) .9
0.40 x (1-c)(-1) 0.9
(-1)
(i)
60,000 x (1-c) 0.9
0.50 x (1-c)(-1) 0.9

B. Where c = 10%
Tax Brackets in Terms of True Tax Rate %
Net Income (Pesos)
From
To
(a)
0
3,000
5
(b)
3,000
6,000
10
(c)
6,000
12,000
15
(d)
12,000
18,000
20
(e)
18,000
24,000
25
(f)
24,000
36,000
30
(g)
36,000
48,000
35
(h)
48,000
60,000
40
(i)
60,000
50

Source: Calculated on the basis of Equation 9 and Table 3.

C. Where c = 40%
Tax Brackets in Terms of True Net Tax Rate %
Income (Pesos)
From
To
(a)
0
2,000
7.5
(b)
2,000
4,000
15.0
(c)
4,000
8,000
22.5
(d)
8,000
12,000
30.0
(e)
12,000
16,000
37.5
(f)
16,000
24,000
45.0

D. Where c = 60%
Tax Brackets in Terms of True Tax Rate %
Net Income (Pesos)
From
To
(a)
0
1,333
11.3
(b)
1,333
2,667
22.5
(c)
2,667
5,333
33.8
(d)
5,333
8,000
45.0
(e)
8,000
10,667
56.3
(f)
10,667
16,000
67.5

(g)
(h)
(i)

(g)
(h)
(i)

24,000
32,000
40,000

32,000
40,000

52.5
60.0
75.0

Source: Calculations based on Part A of this Table.

16,000
21,333
26,667

21,333
26,667

78.8
90.0
112.5

Table 5. A Comparison of the Tax Regimes for Cuban Micro-Enterprise and

Foreign Enterprise Operating in Joint Ventures

Effective Tax Rates

Effective Tax Base
Deductibility of
Investment
Lump-Sum Taxation
Rebates for Tax
Overpayment
Tax Holidays
Profit Expatriation

Micro-Enterprise Sector
May Exceed 100% of Net Income
90% of Gross Income
Not Deductible from Taxable Income

Joint Ventures
30% of Net Income
(50% for mining and petroleum)
Net Income after Deduction of Costs
Fully Deductible from Taxable Income

Up-Front Cuota Fija Tax Payments

Necessary
No Rebates for Overpayment

None

No
No

Yes
Yes

Not Applicable

Appendix Table 1:

Calculations Determining Micro-Enterprise True Tax Rates

With True Net Income at 40% of Gross Income (or c = 0.6)

1
Tax Bracket

2
Gross Income

3
Taxable
Income

4
True Net
Income

5
Tax Rate

6
Tax Payment

7
Net After-Tax
Income

8
NAY as % of
Gross
Income

9
NAY as % of
True Net
Income

10
True Tax
Rate

GYk (1-.1)

Gyk

Nyk

TNYk = GYk
(1-c)

Tk

Mk = TkxNYk

NAYk =
TNYk Mk

NAYk/GYk

NAYk/TNYk

Mk/TNYk

0.355
0.31
0.265
0.22
0.175
0.13
0.085
0.04
-0.05

0.887
0.775
0.663
0.55
0.44
0.325
0.21
0.10
-0.125

11.3%
22.5%
33.7%
45.0%
56.0%
67.5%
79.0%
90.0%
110.5%

(a)
0 - 3,000
(b)
3,000 6,000
(c)
6,000 12,000
(d)
12,000 18,000
(e)
18,000 24,000
(f)
24,000 36,000
(g)
36,000 48,000
(h)
48,000 60,000
(i) 60,000 - e.g. 100,000

0 - 3,333
3,333 6,667
6,667 13,333
13,333 20,000
20,000 26,667
26,667 40,000
40,000 53,333
53,333 66,667
66,667 111,111

3,000
3,000
6,000
6,000
6,000
12,000
12,000
12,000
40,000

1,333.3
1,333.3
2,666.7
2,666.7
2,666.7
5,333.3
5,333.3
5,333.3
17,777.8

Key Assumption: c = 0.6, or purchased inputs = 60% of gross income.

.05
.10
.15
.20
.25
.30
.35
.40
.50

.05x3,000=150
.10x3,000=300
900
1,200
1,500
3,600
4,200
4,800
20,000

1,183.3
1,033.3
1,766.7
1,466.7
1,166.7
1,733.3
1,133.3
533.3
-2,222.3