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Hiring in Cuba
Cuba, officially known as the Republic of Cuba, is a country in the Caribbean. Havana is the capital and the largest city of Cuba. Sugar-milling, construction, agriculture, oil refining and tourism are some of the main sectors of Cuba. Its main trading partners are Venezuela, China, Spain, Canada, Mexico, Brazil, and the Netherlands. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Cuba’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. The Labor Code stipulates that employees are entitled to 20 days of paid annual leave. The concept of ‘residence’ makes no difference in Cuba. Anybody who has a home in Cuba is subject to taxation. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuing compliance with Cuba’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- Probationary period cannot exceed 6 months
Annual Leave
- An employee is entitled to annual leave in accordance with their employee contract with a minimum of 20 days/year being granted.
Public Holidays
- Triumph of the Revolution (31st December to 2nd January)
- Good Friday (10th April)
- Labor Day (1st May)
- Day before the Commemoration of the Assault of the Moncada garrison (25th July)
- National Rebellion Day (25th to 27th July)
- Independence Day (10th October)
- Christmas Day (25th December)
- New Year's Eve (31st December)
Maternity Leave
- Pregnant women are entitled to 18 weeks fully-paid leave (six weeks before birth and 12 after), plus an additional 40 weeks at 60% pay, assured of returning to their same job.
Paternity Leave
- Fathers are entitled to 90 days of paternity leave at 60% of pay
Sick Leave
- An employee is entitled to sick leave with full pay of up to 30 working days in a three-year period.
Work Hours
- Cuba has a 44 hour working week
Notice Period
- In the event of the Cuban employee's resignation, if the contract is for an indefinite period he is obliged to give the employer thirty days' notice, with fifteen days for temporary contracts.
Severance
- There is no indication of severance payment or redundancy payment of such kind
- However, according to article 52 of Labor Code, the worker, at the time of termination of the employment relationship, has the right to receive the salary for the work performed, the amount of the accumulated for annual paid vacations, as well as that corresponding to the provision of security social that had been perceiving.
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or the 14th month.
- The labour code is geared at ensuring workers productivity, the bonuses that are prescribed in the code detail the manner in which those bonuses will be paid to eligible employees.
income tax
- Anybody who has a home in Cuba is subject to taxation.
- If you are a foreign national and you have spent 180 days of one tax year in the country, then you are also liable to taxation on any money you have made during your time in the country.
- However, the concept of ‘residence’ makes no difference in Cuba. It is also worth noting that for the purposes of taxation in Cuba, the vast majority of Cuban people will be taxed on all money that they earn worldwide.
- It is only those who are not full-time residents of the country that will only be taxed on their local income.
- Residents of Cuba pay income tax (impuesto) at anything from 10% to 50%, depending upon the level of their income.
- Anybody who earns up to 3000 CUP each year will pay at the lowest rate, then for every extra 3000 CUP that is earned the rate goes up by 5%, until it reaches the maximum of 50%
|
Income Tax |
Rate (%) |
|
CUP 0 - 3,000.00 |
5 |
|
CUP 3,000.00 - 6,000.00 |
10 |
|
CUP 6,000.00 - 12,000.00 |
15 |
|
CUP 12,000.00 - 18,000.00 |
20 |
|
CUP 18,000.00 - 24,000.00 |
25 |
|
CUP 24,000.00 - 36,000.00 |
30 |
|
CUP 36,000.00 - 48,000.00 |
35 |
|
CUP 48,000.00 - 60,000.00 |
40 |
|
Over CUP 60,000.00 |
50 |
deductible expenses
- Various deductions may apply in computing taxable income and some categories of income are exempt.
- Deductible expenses include certain charitable donations and work related expenses
immigration
- If you are thinking about working in Cuba, you will need to apply for a work visa in advance.
- This is applicable to almost every nationality.
- There are multiple types of work visa available, so ensure you are choosing the correct one for your profession.
- The types of work visa available for Cuba are as follows:
-
- D-1 visa for employees with technical, scientific, or other specialized qualifications
- D-2 visa for students and scientists
- D-3 visa for artists
- D-4 visa for athletes
- D-5 visa for asylum seekers and refugees
- D-6 visa for journalists
- D-7 visa for traders and businesspeople
- D-8 visa for religious workers
- D-10 visa for medical tourists
- Official visit visas or ‘diplomat visas’ are also available for Cuba, but are only applicable to diplomats, ambassadors and politicians visiting from other countries.
- Many people find it difficult to get a work visa for Cuba, unless they have a contract offer prior to applying, or have relatives who are Cuban citizens.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
D-1 Visa |
|
30 days |
|
|
D-7 Visa |
|
30 days |
|
value added tax
- There is no VAT in Cuba but there is a sales tax whose rate varies depending on the type of the product.
- A tax rate of 2% is applied on wholesale sales, 10% on retail sales and 10% on services.
- Consumer goods serving as raw materials for industry or destined for export are exempted.
|
VAT |
|
|
Standard Rate |
10% |
|
Reduced Rate |
2% |
|
Zero Rate |
0% |
withholding tax
- There is no withholding tax on dividends, interest, royalties in Cuba
termination
Article 45 provides that the employment contract may end due to:
-
- agreement of the parties;
- initiative of any of the parties;
- retirement of the worker;
- death of the worker;
- extinction of the entity, when there is no other subrogated in its place; and
- expiration of the fixed term or the conclusion of the agreed work, in the case of fixed-term contracts or for the execution of a job or work.
- Moreover, article 49 of Labor Code provides that the employment contract might be terminated by the employer due to:
-
- loss of proven suitability;
- definitive relocation outside the entity of the available worker, or when the proposed employment is not unjustifiably accepted by the worker, or when the salary guarantee period expires without having been employed;
- definitive relocation outside the entity of the worker who is declared a person with a partial disability; non-suitability of the partial disability for a job offer according to the worker´s capacity inside or outside the employer or disapproved requalification, in both cases, for unjustified reasons;
- application of the definitive separation measures of the entity or sector or activity, when appropriate, due to the non-observance of the disciplinary norms established in the legislation and in the disciplinary regulations;
- Compliance with the term of the maternity leave or, where appropriate, the social benefit or unpaid maternity leave, in the terms and conditions established in the legislation, without the worker who has enjoyed it being reinstated to the job;
- Sanction of deprivation of liberty by final sentence or security measure, in both cases when it exceeds six months, if the employer so decides;
- non-reinstatement upon expiration of the unpaid leave granted by the employer; and
- other causes provided for in the legislation.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Paternity Leave |
|
Sick Leave |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- The tax year (año fiscal) in Cuba generally runs from January to December but for most people will be a period of 12 months that begins when they first become liable for tax payments.
- Every person liable for tax must file a tax return with the National Tax Administration or for some employees’ tax money can be deducted from salaries.
- Some workers will find that only a proportion of their tax is deducted via their salary and they will still have to file an income tax return to calculate what is still owed.
- This is usually 70% of the tax that is due, with the remaining figure to be calculated when the return is completed.
employee accruals
| Christmas Bonus% |
0% |
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary) |
| Vacations % | An employee is entitled to annual leave in accordance with their employee contract with a minimum of 20 days/year being granted (5.49% of annual salary) |
| Notice % |
Cannot fire employee but must be returned to hiring entity (no notice) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | 0% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 14.37% |
employer accruals
Additional information (Country Accruals)
| Social Security |
14.00% |
| Maternity |
4.93% |
| Sick leave |
2.74% |
| Vacations |
9.04% |
|
Coverage: |
|
|
Employed persons. |
|
|
Special systems for military personnel, interior ministry staff, certain self-employed persons, certain artists, musicians, and members of agricultural cooperatives. |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | An employee is entitled to annual leave in accordance with their employee contract with a minimum of 20 days/year being granted. | This equals 5.47% (20/365 days) of annual income |
| Maternity Leave | Pregnant women are entitled to 18 weeks fully-paid leave (six weeks before birth and 12 after), plus an additional 40 weeks at 60% pay, assured of returning to their same job. | This equals 34.6% (18/52 weeks) of annual income |
| Paternity Leave | Fathers are entitled to 90 days of paternity leave at 60% of pay | This equals 60% times 24.6% (90/365 days) of annual income |
| Sick Leave | An employee is entitled to sick leave with full pay of up to 30 working days in a three-year period. | This equals 8.22% (30/365 days) of annual income |
| Social Security | Public Sector employers contribute 12.5% Private sector employers contribute 14.5% |
This equals 14.5% of annual income |
