One generally associates Cuba with premier cigars, mojitos, and Fidel Castro. Income taxes, on the other hand, are probably not something most would contemplate when thinking about Cuba. Nevertheless, income taxes have moved to the forefront because for the first time since 1959 when nearly all taxes were abolished as a result of the revolution, Cuba has issued its first income tax code and regulations. Although approved on July 23, 2012, Law 113 (the new Cuban tax law) was released on November 21, 2012 in the 53d issue of the Official Gazette.

The new tax code, effective January 2013, is intended to contribute to the steady growth of economic efficiency and to the public expenses of Cuba’s budget so as to achieve the financial balance required by the Cuban economic model. At a press conference, as reported in this article, Meisi Bolaños, Deputy Minister of Finances and Prices, explained that the new tax law “seeks to create a tax-paying culture and a sense of social responsibility among the population and the entities as well as guarantee the redistribution of the incomes from the sectors with highest income revenue to the lower-income sectors.”

Numerous new taxes are introduced by Law 113, including taxes on: personal income; profits; sales; products and services; housing and real estate; certain farm and forest lands; ownership or possession of idle lands; land transportation; ownership or possession of vessels; inheritance and asset transfers; document transfers; payroll; use or exploitation of beaches; residual disposal on hydrographical basins; the use and exploitation of bays; the use and exploitation of forest resources and wild fauna; the right to use inland waters, and customs taxes. The new tax code also sets the corporate income tax rate at 35%, on par with the United States, and provides targeted incentives.

A new agency by the name of Oficina Nacional de Administración Tributaria (“ONAT”) is to be established under the Ministry of Finances and Prices. ONAT will be responsible for the collection, payment, and audit of taxes imposed under Law 113. It will be interesting to see how successful Cuba’s fledgling income tax system will be. For additional reading, see.