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  • Workers prepare tobacco leaves at a tobacco factory in Cuba

    Workers prepare tobacco leaves at a tobacco factory in Cuba's western province of Pinar del Rio, Cuba, February 28, 2017. | Photo: Reuters

Published 11 July 2018

The new policy simplifies the system and prevents inequality.

The Cuban government just announced a new set of measures to support, adjust and improve the growing self-employment activities in the island, updating requirements, legal and tax responsibilities.

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“There is no reverse on self-employment, we must preserve this economic activity but in an orderly manner,” said Marta Elena Feito Cabrera, the employment and social security vice-minister, during a press conference.

Feito said the government is eager to develop this economic sector and pointed out that 157,351 were registered for self-employment in 2010, when new reforms were implemented. Now, there are 581,456 registered, amounting to 13 percent of the country's working force.

“The self-employment work (TCP) has helped the process of labor restructuring that started in Cuba in 2009. It contributes to create employment and slowly free the State from non-essential activities to focus on those important strategies for the nation... there have been deviations that the new policy wants to correct.”

The government has restricted new licenses for 27 activities in 2017 until a TCP reform, but these will be reopened by December under the new policy.

Also, new licenses will be created. The license to for restaurants and food and drinks services will be divided in two: restaurant and food and services; and bars and recreation. Also, the bakery-confectioner and transportation services figures were created.

The spirit of the reform is to simplify the system. They reduce the number of categories of self-employment to 123 from 201, which will then be grouped into 28 to make tax collection easier. This doesn't mean a reduction in the activities, as persons will be able to do more with only one license.

In the “beauty” sector, for example, people will be able to do seven different activities, allowing a more comprehensive service with the same tax burden and license and reducing bureaucratic processes.

The new regulations establish a limit of one approved activity per person, something that international media have dubbed as “tighter controls on the nascent private sector.” Also, one registered location can only do one of the food and drinks services activity, whether it's a restaurant, a cafeteria and a bar.

“There are self-employed that own a cafeteria and at the same time have a manicure, a car cleaning license, or a shoe producer and trader. That's not possible. In practice, it's an owner with many businesses, and that's not the essence and spirit of the TCP, which consists of workers doing their activity on a daily basis,” said Feito.

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The growth of the private sector has sparked some complaints within the Communist Party and among ordinary Cubans about rising inequality. The earnings of some business owners dwarf the modest income of most people who are self-employed, and of those getting by on state wages.

No activities were prohibited or eliminated. They're grouped in other activities, reducing administrative costs and simplifying tax collection.

The 28 activities groups will be divided into a general tax regime and a simplified tax regime, according to the head of the tax policies minister Vladimir Regueiro Ale. Taking into account the 123 activities grouped, 71 will be on the general regime and 52 to the simplified.

However, the reforms do put restrictions on some activities due to different reasons. No more licenses will be granted for agriculture and livestock products. It's also restricting licenses for mechanical fair games, due to technical training issues.

The reforms aim to stop the abuse of raw materials and equipment, tax evasion, lack of training and other irregularities.

“This is about rectified deficiencies so self-employment can keep developing,” said Feito.

Until the reforms are implemented in December, there will be training and seminars for self-employed people in Havana and the different provinces.

Feito explained that 98.4 percent of the self-employed are included in the licenses, but the remaining (out of which 50 percent live in Havana) will have to decide on a different activity, having 90 days to decide after the measures are implemented.

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Cuba Reforms

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