Cuba to revoke 10-pct tax on USD amid COVID-19 pandemic

Source: Xinhua| 2020-07-17 14:13:17|Editor: huaxia

HAVANA, July 16 (Xinhua) -- Cuba will repeal its 10-percent tax on U.S. dollars on Monday as part of the government's socioeconomic strategy to help the Caribbean island recover from the COVID-19 pandemic, Cuban President Miguel Diaz-Canel said Thursday.

"We will improve the wellbeing of the population, the reason why we receive support from people," Diaz-Canel said at a Council of Ministers' meeting.

"We have to get accustomed to living with fewer imports and more exports, by promoting national production to meet internal demand and enhancing the role of local governments," he said.

The decision will allow citizens to use dollars to buy food, hygiene products and other goods from nearly 70 stores.

Cuba legalized the circulation of dollars in 1993. Since 1994, the country has functioned with two currencies, the Convertible Cuban Peso and the Cuban Peso.

In 2004, Cuba imposed a 10-percent tax on dollars in cash due to U.S. sanctions, which prohibited Cuba from conducting transactions in the greenback, and subsequently damaged Cuban businesses and financial activities.

In October 2019, Cuba reintroduced the use of dollars, along with other foreign currencies, for citizens to buy imported goods such as electronics and car parts at state-run stores across the country.

"Removing penalty on U.S. dollar will benefit Cubans on the island and abroad alike. This will provide them with more purchasing power," said Cuban Vice Prime Minister and Economy Minister Alejandro Gil.

Private and cooperative sectors will be further developed, and the entrepreneurial sector will be given more autonomy, he said.

"Although fundamental causes of 10-percent tax on U.S. dollars have not disappeared, it is important to facilitate the use of U.S. dollars for exports," said Minister of Foreign Trade and Investment Rodrigo Malmierca.

Small- and medium-sized private businesses will be allowed to import and export products and services through 37 state-run enterprises, Malmierca said.

Oscar Fernandez, senior professor of the School of Economics at the University of Havana, said abolishing the tax is a positive measure for the country.

"The government is moving on the right track. This decision will attract hard currency and reactivate the Cuban economy. Cuban economists have been waiting for this decision for a long time," Fernandez said.

During Thursday's meeting, Diaz-Canel also denounced the tightened U.S. economic sanctions amid the COVID-19 pandemic, which he said were imposed because the United States is upset about Cuba's effective anti-epidemic fight.

"We are adopting new measures not only to endure, but also to successfully move on and develop the country," he said.

Cuba has so far registered 2,440 COVID-19 cases, with 87 deaths.

The government has announced that 13 out of the 15 provinces, as well as Isla de la Juventud special municipality, will gradually enter the third phase of the country's post-pandemic recovery plan as of Monday, while capital Havana will move to the second phase. Enditem