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Cuba OKs rules on commercial zone at Mariel Port

Tuesday - 9/24/2013, 4:50pm  ET

ANDREA RODRIGUEZ
Associated Press

HAVANA (AP) -- Cuba has approved tax exemption rules for a special commercial zone at a massive port under construction west of Havana, in hopes of luring more foreign investment as the country tries to lift its economy with a series of reforms.

Signed by President Raul Castro and published this week in the government's Official Gazette, the law says commercial operators in the industrial park at the Port of Mariel will be exempt from labor and customs duties, won't have to pay taxes on sales or services for the first year and will enjoy a 10-year tax holiday on profits. After that, profits will be taxed at 12 percent.

The 180-square-mile (465-square-kilometer) special zone aims to create jobs and "promote increased infrastructure and activities that permit the growth in exports, and the substitution of imports," the decree said.

Cuban authorities have recently recognized the need to attract more foreign investment, which has waned in recent years although the government has not made figures public.

Local employees must still be hired through state-run agencies, a practice that is often criticized by foreigners doing business on the island.

The rules take effect Nov. 1.

Cuba experimented with small special economic zones in the 1990s, but they fizzled out without having a significant impact on the economy.

Mariel, about 28 miles (45 kilometers) west of the capital, is due to come online around the end of the year and replace Havana as Cuba's hub of shipping activity.

Havana decided to build the port after determining in 2009 that the Bay of Havana could not be expanded to accommodate larger ships that will begin passing through the Panama Canal in 2015.

Two-thirds of Mariel's $900 million cost has been financed with investment from Brazil, whose president, Dilma Rousseff, is expected to visit in January for the inauguration of the first stage of operations: 770 yards (700 meters) of docks and a container terminal.

"It's not just a port, it's a logistical system for the exportation of goods produced here in Cuba," Rousseff said while touring the construction site in early 2012.

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Andrea Rodriguez on Twitter: www.twitter.com/ARodriguezAP


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