Self-Employment Tax Update

September 30, 2021

On September 29, 2021, the “Invasor” website published an update of the tax framework for TPC (Trabajo por Cuenta Propia – Self-Employment). 

1. Tax amendments

In the Official Gazette No. 94 of August 2021, decrees and/or resolutions were approved that modify and update the action scope of self-employed workers (TCP), non-agricultural cooperatives, and the recently approved micro, small and medium-sized enterprises (MSMEs).

2. Modifications in the TCP

According to the specialist Sayli Sosa, among these modifications are the changes in the taxation for TCPs, whether under the simplified or general regime. Marilyn Aragón Aragón, the institutional communicator of the ONAT (Oficina Nacional Tributaria – National Tax Office) in the province, explained that concerning the simplified regime, where less complex activities are gathered, the unified payment of Sales or Services Tax and Individual Income Tax will be performed through the quarterly contribution of monthly consolidated installments.

3. Requirements for the unified payment

Concerning the aforementioned, it would be a requirement that the TCP has no hired workers and its annual income does not exceed 200,000.00 pesos. Likewise, TCPs paying taxes under the Simplified Regime must pay the consolidated installments, consisting of 20% of the income obtained, after deducting 3,260.00 Cuban pesos, which is recognized as the minimum monthly exempt amount.

4. Deadline top apply for the simplified regime

The request to join the simplified regime is due until December 31. If there is no filing at the municipal offices, it is automatically transferred to the general regime.

It should be noted that those included in the General Taxation Regime are obliged to open and operate a bank account in a branch of a commercial bank with a minimum balance of 3,000.00 Cuban pesos. 

5. Prepayment of individual income tax

The prepayment of the Individual Income Tax is very necessary through a monthly installment consisting of 5% of the income obtained in the month.

Likewise, the general regime mandates the monthly payment of Sales and Service Taxes, applying a tax rate of 10% on the monthly income obtained.

6. Special social security regime

According to the specialist Sayli Sosa, regarding the special social security regime for TCPs, Decree-Law 48 introduces the novelty that the spouse and relatives of TCPs up to the second degree of consanguinity and first degree of affinity, who participate in the exercise of the activity, are not obliged to be affiliated.

The affiliates’ contribution is 20% of the contribution base selected by the affiliate, taking as a reference a scale ranging from 2,000.00 to 9,500.00 pesos.

Source: Invasor 30/09/21