Wharfage and Storage Charges. Fees vary. (Article 184 of the Customs Regulations; Law of July 24, 1917; Decrees 1253 of August 31, 1917; 579 of April 8, 1918; 580 of April 9, 1918; 33 of January 13, 1919; 318 of February 27, 1919; and Regulations of Free-Port of Matanzas.)

GROUP 11

CONSUMPTION, EXCISE, AND OTHER TAXES

Consumption Taxes

(Applicable to Domestic and Imported Products)

Gasoline. Consumption taxes on gasoline total 13 centavos per gallon. Gasoline and substitutes therefor extracted from the soil of Cuba are not subject to a consumption tax of 2 centavos per gallon (included in the above total) as long as domestic production does not exceed 30 percent of the domestic consumption. Alcohol of domestic manufacture destined for motor fuel is exempt from payment of the consumption taxes. Gasoline used in aircraft engaged in international traffic is also exempt, when the aviation company has mail contract with the Cuban Government. (Law of July 15, 1925; Law of January 22, 1932; Decree 1930 of August 29, 1933; and Decree-Law 249 of September 18, 1935.)

a

Edible Oils and Fats. A consumption tax of 1 centavo per pound, with the exception of hog lard produced in the United States. (Law of January 22, 1932; and the Reciprocal Trade Agreement.)

Salt. A consumption tax of one-half centavo per pound. 01 January 22, 1932; July 29, 1932; and June 25, 1938.)

(Laws

Automatic Lighters. Lighters made in Cuba or the United States are subject to a consumption tax of 5.00 pesos each; lighters from all other countries are subject to a tax of 10.00 pesos each. (Laws of December 27, 1929; and January 22, 1932.)

Sugar. A consumption tax of 1 centavos per pound or fraction thereof on refined and turbinated, bleached or washed sugars in excess of 96 degrees polarization. Sirups, destined for domestic consumption, produced by liquefying sugars subject to the tax, pay at the rate of 18 centavos a gallon, regardless of their density. The Law of June 25, 1938, which repealed exemption formerly allowed under this tax provides that manufacturers who use sugar subject to the tax and whose products, by reason of the resulting increase in production costs, are placed at a disadvantage against similar products imported from other countries, or whose products, for the same reason are placed at a disadvantage against similar products in foreign markets, will receive subsidies out of the proceeds of the tax. (Decree-Law 660 of March 19, 1936; Decree-Law 699 of March 28, 1936; Law of June 25, 1938; and Special Instructions in Official Gazette of August 19, 1938.)

Alcohol. A consumption tax on domestic alcohol and alcohol imported from the United States of from 0.10 peso to 0.40 peso per liter or fraction according to type, use and container of the alcohol, excepting alcohol destined for motor fuel and denatured alcohol. Alcohol imported from non-treaty countries pays rate. (Laws of January 29, 1931; January 22, 1932; and Decree-Law 564 of February 6, 1936.)

double the above

Vinegar. Imported vinegar, with the exception of vinegar imported from the United States, pays a special consumption tax of 0.05 peso per liter. (Decree-Law 564 of February 6, 1936.)

Beer.

A consumption tax of 0.10 peso per 9 liters of domestic beer or beer imported from the United States. Beer imported from countries other than the United States pays at the rate of 0.05 peso per liter. (Decree-Law 564 of February 6, 1936.)

Loan Taxes.

Excise, and Other Taxes

Manufacturers of tobacco, matches, alcoholic beverages, prepared waters, soft drinks, and playing cards are subject to excise taxes. These taxes are known as the "loan taxes" (impuestos del emprestito) and are pledged to the service of the 35-milliondollar, 1904, Speyer Loan. In the case of imported products they are collected at customhouses.

On

On domestic cigarettes and those imported from the United States the tax amounts to three-fourths of 1 centavo for each sixteen cigarettes or fraction, so that a package of 20 such cigarettes pays a tax of 1 centavos On cigarettes of other origin the tax is 0.05 peso for each 16 cigarettes or fraction. Matches of domestic or United States origin pay at the rate of one-fourth of 1 centavo for each fifty matches or fraction. Matches imported from other countries pay at the rate of 1 centavo for each fifty matches or fraction. playing cards (domestic or foreign) the rate is 0.05 peso per deck. Domestic prepared waters and soft drinks and those imported from the United States pay at the rate of 0.05 peso for each case of 24 half bottles or smaller containers, while syphons and cylinders pay at the rate of one-half of 1 centavo and 0.05 peso each, respectively. Soft drinks and prepared waters from other countries pay at the rate of 0.05 peso per liter.

Alcoholic beverages (except beer) pay "loan taxes" ranging from 0.02 peso to 0.30 peso per liter, bottle, or fraction of a liter greater than half a liter, according to type and contents of container. Alcoholic beverages imported from the United States, and certain countries with which Cuba has treaties pay the above domestic rates, while those imported from non-treaty countries pay double the above rates. (Laws of February 27, 1903; May 7, 1903; June 13, 1903; January 22, 1904; January 25, 1904; April 21, 1909; January 29, 1931; January 22, 1932; January 26, 1932; July 29, 1933; Decree-Laws 407 of August 10, 1934; 445 of August 24, 1934; 489 of December 28, 1934; 98 of July 24, 1935; 167 of August 21, 1935; 173 of August 23, 1935; 174 of August 23, 1935; 211 of September 10, 1935; 230 of September 17, 1935; 564 of February 6, 1936; 598 of February 18, 1936; 626 of March 3, 1936; 632 of March 6, 1936; and 657 of March 13, 1936.) Alcoholic ethers, alcoholates, alcoholic extracts, essences, liquors, or any other product not especially classified will pay an internal tax of from 0.10 peso to 0.40 peso per liter according to purity or container or whether it contains ethyl alcohol. Imports from the United States and certain treaty countries pay the domestic rate, while those of non-treaty countries pay double the domestic rate. (Decree-Law 564 of February 6, 1936.)

Coffee. A processing tax of, one-fourth of 1 centavo per pound of coffee hulled and one-fourth of 1 centavo per pound of coffee roasted, destined for local consumption.

In addition federal license fees are levied on coffee hullers and roasters ranging from 20.00 to 500.00 pesos per year in the case of hullers and 50.00 to 1,000.00 pesos per year in the case of roasters.

(This is apparently the only industry subject to federal license fees.)

All bills of lading, invoices, receipts, certificates of deposit, and all other documents relating to the production, sale, transfer and processing of coffee must carry a 2-centavo stamp known as the Sello de Defensa del Cafe (Coffee Defense Stamp). (Decree-Law 798 of April 11, 1936.) Cattle Hides.

A tax of 50 centavos per 100 pounds of cattle hides. 1917.)

(Law of July 31,

A tax of from 6 to 20 percent of net profits of merchants and manufacturers and all commercial and industrial companies or organizations, whether individual or partnerships (except those shown below) in accordance with the following scale:

Corporations; silent partnerships the investment in which is represented by shares of stock; those of limited liability with respect to the profit on shares, if any; banks and bankers; all associations under the general law, whether industrial or mercantile, organized or which may be organized in Cuba or abroad, for the manufacture of sugar; and individuals engaging in the industry; and mining companies and properties; shall pay profits taxes in accordance with the following scale:

Transportation Companies.

A tax of 8 percent of the net profits

of railways and domestic navigation companies, operating in coastwise service or on the high seas. Foreign navigation companies pay, in lieu of a profits tax, 3 percent of their gross revenues from freight and passenger services for foreign destinations.

Cooperatives and Credit Companies. A tax of 4 percent of the net profits of producers and consumers cooperatives and credit companies. Those of the laboring classes are excepted, provided that they are officially registered as such, and restrict their business to members. Branches, Subsidiaries, etc. In the case of foreign companies operating in Cuba through branches, subsidiaries, agents, or legal representatives, the Government may assess, in lieu of the tax on

profits, a 3-percent tax on total gross receipts of the local entity if it has satisfied itself that the local entity cannot show a profit because of the method by which costs and selling prices of their merchandise are fixed (contractually or otherwise) by the parent concern. This tax also applies to those instances in which the local entity has agreed to pay the parent concern a certain percentage of the revenues obtained in Cuban territory from the sale, rental, exhibition or otherwise of the articles which they handle.

The tax of 3 percent on gross receipts also applies to radiotelegraph, cable, and radiotelephone companies. It specifically includes foreign companies which engage in Cuba in the sale, rental, exhibition or operation of motion pictures and those which have contracts with other entities in Cuba under which they receive a percentage of the revenues obtained from the above operations.

In the instances cited above, the tax applies regardless of whether or not the local branch or subsidiary operates as a Cuban company. Insurance and Bonding Companies. A tax of 4 percent of annual premiums paid to insurance and bonding companies, in lieu of the profits tax.

They must, however, pay the corresponding taxes on profits derived from any business or transactions other than their regular insurance or bonding business.

Securities. A tax of 5 percent on the interest paid to holders in Cuba of foreign securities issued by Nations, States, Provinces, or Municipalities, or by private enterprises that do not operate in Cuba.

Bonds and Stock Dividends. A tax of 4 percent on stock dividends or interest on bonds of corporations and stock partnerships in commandi tum and those of limited liability, if any, whether Cuba or foreign-owned, having their entire business in Cuba, including sums distributed to shareholders, taken from reserved funds or from other funds subject to the tax.

Loans. A tax of 4 percent of the interest on loans not secured by real estate, excluding those made by banks and bankers domiciled or located in Cuba and which pay the profits tax under the scale set up for banks or bankers; the legal interest rate of 6 percent being taken as a basis for the liquidation of this tax when no other rate is stipulated.

A tax of 2 percent on interest on loans secured by real estate (See Group IV Property, Etc.). Certificates or bonds which represent a general aggregate of loans secured by real estate, shall be exempt from this tax since each of said loans has already been taxed separately.

The following citations cover all taxes on profits: (Military Orders 106 of July 11, 1899; 306 of August 7, 1900; 312 of August 10, 1900; 463 of November 13, 1900; Laws of July 31, 1917; July 1, 1920; April 11, 1922; July 14, 1923; July 15, 1925; January 27, 1927; July 6, 1928; January 29, 1931; Decree 690 of May 14, 1931; Laws of January 22, 1932; July 29, 1932; August 11, 1932; September 23, 1932; DecreeLaws 138 of August 9, 1935; 205 of September 3, 1935; 316 of October 11, 1935; 811 of April 4, 1936; and Law of June 23, 1938).

Commercial Operations

Gross Sales Tax. A gross sales tax of 1 percent of the value of all imported and domestic products, except raw materials and totally or partially manufactured products destined directly for export with 125089 0-39-2

the exception of molasses. 5 Farmers, fishermen, and certain Cuban manufacturers or producers who sell direct to consumers are exempt. Licensed wholesalers are exempt from payment of the tax in the customs and pay it only upon the sale or transfer of the merchandise they import. (In effect this tax is practically a 3-percent gross sales tax, as in most instances it is collected at least twice before the taxable article reaches the ultimate consumer.)

A minimum quota of 3.00 pesos per month if fixed for all those subject to the tax, so long as their operations do not exceed 200.00 pesos in the month in question. On the excess the 1-percent tax shall be paid as heretofore.

All products manufactured in Cuba and subject to the "Loan Taxes "6 are exempt from the tax. (Laws of October 9, 1922; July 15, 1925; January 27, 1927; January 29, 1931; January 22, 1932; Decree-Laws 393 of November 8, 1935; 572 of February 11, 1936; 740 of April 3, 1936; and Law of June 28, 1938.) Installment Plan Sales. A tax of 2 percent of the sum paid by buyers to individuals or companies engaged in the sale of personal property, chattels, and real estate on the installment plan. Such transactions are exempt from the profits tax. (Laws of July 6, 1928; January 29, 1931; and July 29, 1932.)

Tax on Guarantee Deposits. A tax of 3 percent per annum on the amounts held as security for contracts or obligations by gas, electricity, water supply, and telephone companies and by other individuals or concerns engaged in the same or similar business. (Laws of April 11, 1922; and August 11, 1932.)

Contribution to Railroad Commission. Public service railways must contribute a sum, according to their proportion of the total mileage operated, which is used to defray the expenses of the Railway Commission. (Law of February 14, 1938.)

Maternity Fund. Employers contribute one-half of 1 percent of payroll, laborers and employees contribute one-fourth of 1 percent of wages or salaries to the Maternity Fund. (Decree-Laws 781 of December 20, 1934; 787 of April 5, 1935; and Law of December 15, 1937.)

Retirement Funds. Public utilities, the Cuban Government, and many other companies operate compulsory or voluntary retirement funds. (Laws of June 25, 1919; November 24, 1921; June 23, 1922; October 3, 1923; July 4, 1927; September 10, 1927; June 14, 1929; October 4, 1929; Decree 786 of July 11, 1930; Decree-Law 304 of June 26, 1934; 172 of August 23, 1935; 465 of December 20, 1935; Law of September 3, 1938; and Law of September 7, 1938.)

Stamp Tax. Stamps must be affixed to and cancelled on stock exchange transactions; certified copies of deeds executed before notary public or documents protocolized by a notary public; handwritten originals or notarial documents; private receipts; commercial invoices; private documents of purchase or sale; conveyances; leases; bond and insurance policies of all kinds, except life insurance; premium receipts; bills of exchange in general; travellers cheques sold in Cuba; payrolls and vouchers of all kinds, except inter-organization papers; judicial bills and complaints; appeals to the Government; certificates issued by the Government, the Provinces, or Municipalities, by Registrars of Property, Mercantile Registrars, and Marine 5See Group I - Customs Duties, Etc.

"See Group II

Consumption, Excise, and Other Taxes.