In Cuba, the taxation of capital gains is governed by Law No. 113, the Tax Code, specifically Article 104, which outlines the taxable income subject to tax, including gains or profits arising from the disposal of capital assets.
Definition of Capital Gains
Capital gains in Cuba refer to the profit realized from the sale or disposal of capital assets, including but not limited to:
- Real estate properties
- Stocks and securities
- Bonds and debentures
- Business assets
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The formula for calculating capital gains is as follows:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Adjustments or deductions may be allowed in the calculation of the gain, including expenses related to the sale (e.g., brokerage fees, legal fees) and any improvements made to the asset during ownership.
Tax Rates
Capital gains in Cuba are taxed at a flat rate of 15%. This rate applies to all categories of capital gains, regardless of the holding period or the nature of the asset disposed of.
Legal Framework
The legal framework governing the taxation of capital gains in Cuba is primarily based on the following articles of Law No. 113, the Tax Code:
- Article 104: Defines taxable income subject to tax, including gains or profits arising from the disposal of capital assets.
- Article 105: Specifies the calculation of taxable capital gains, including the formula and allowable deductions.
- Article 106: Outlines the tax rates applicable to capital gains, including the flat rate of 15%.
Policy Objectives
The Cuban government's policy objectives behind the taxation of capital gains are to:
- Generate revenue for the government
- Ensure that individuals and businesses contribute their fair share of tax on profits realized from investments and asset disposals
- Promote investment and economic growth by providing a stable and predictable tax environment
Cuba's capital gains tax system is relatively straightforward, with a flat tax rate of 15% applied to all categories of capital gains. The legal framework governing the taxation of capital gains is clear and provides taxpayers with certainty in calculating their tax liability.
If you need any other informational tax guides for other countries, feel free to browse our other articles below:
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