In the eastern province, 97% of the 314 MSMEs did not pay tax, for a total of 50.3 million pesos
14ymedio, Madrid, November 27, 2024 — Although non-compliance with tax obligations in Cuba is well known, the high figures in Holguín, disseminated this Wednesday by the provincial director of the National Office of Tax Administration (Onat), Jorge Félix Pérez Marrero, are still surprising. The official places at 1,300 the number of Cubans in Holguin who cannot leave the country because of their debts to the State. There are fewer in Sancti Spíritus, only 200 according to the official newspaper Escambray.
The numbers are heartbreaking in the eastern province, where 97% of the 314 businesses obliged to pay evaded taxes, a total of 50.3 million pesos that did not end up in a timely manner in State coffers. In the same situation are the self-employed workers, who presently owe 31.5 million. In total, there are 38,302 self-employed workers of whom 8,120 were inspected: 97.7% of them had defrauded the State, although Onat makes it clear that when a tax investigation is opened it is because there are already indications, based mainly on the cross-checking of data.
The largest volume of debts – 70 million – corresponds to a small group of 36 taxpayers, who have “high import volumes.” The supervision work achieved the collection of 79 million pesos, obtained from “firm actions on 745 debtors,” while more than 100 fines of 615,900 pesos were imposed after carrying out checks on 239 taxpayers with irregularities in their tax bank accounts.
Most of that extra collection is due to the end of the tax exemption for newly created ’MSMEs’
Despite these data, Holguín has raised significantly more than what was planned, since the goal was to contribute 3.5 billion pesos to the State budget at the end of October, and the amount is already 826 above, that is, 4,326. Most of that extra collection is due to the end of the tax exemption for newly created MSMEs*.
The measure was advanced in December 2023, when the Government – seeking to increase collection to reduce the deficit and increase income – talked about approving a package that included the elimination of the exemption from the 10% tax on wholesale marketing for MSMEs. The realization came in August, with the group of 19 rules that added another tax requirement to the previous one: private individuals would no longer be exempt from paying personal income tax for the dividends from their first year of operations.
As a result, 543 MSMEs have begun to pay taxes in Holguín, totaling 609 million pesos. They are joined by the 162 who already paid, from the total of 256 unpaid that were detected in the Onat inspections.
The province’s fiscal deficit is above 2.6 billion pesos, so officials consider that any effort is small when it comes to raising as much as possible. “The confrontation with tax evasion and the under-declaration of income goes beyond an obligation. It is a necessity, not only because of the financial resources that are rescued and put in function of social expenses, but because it slows down the environment of impunity and disorder that some try to impose,” Pérez Marrero told the official press.
Yosvanis Meneses Torres, the Onat manager interviewed, stated that tax evasion can lead to penalties of deprivation of liberty, as is the case for two men who are awaiting trial and a third who has already been sentenced to three years of correctional work with internment. In addition, according to the specialist, there are six other cases in the hands of the Prosecutor’s Office for “ignoring” their tax obligations. In Holguín there are 66,000 registered taxpayers.
Meneses Torres explained to the State newspaper Granma that when starting a proceeding three circumstances can occur: that the information is “defining,” that it is necessary to talk to the taxpayer to clarify the accounts, or that a third party is required to clarify a certain situation. “For example, this is done when State entities, for services provided or assets created, pay high sums to private individuals, but with indications that they contributed below what corresponded to them.”
The manager points out that they have detected that some companies declare stable sales at the same time that imports increase
The manager points out that they have detected that some companies declare stable sales at the same time that imports increase. “It may be that prices increase and demand decreases, but this is not presently the case. Even with a price increase, food maintains demand, and that gives a higher level of income,” he explains, in reference to one of Onat’s alarm signals.
The director confirms that in the context of inspections, private individuals have appeared who declare a loss. When asked if this situation can be interpreted as a camouflage to evade tax, he says it is being closely followed.
Meneses Torres also explains that some MSMEs declare losses during inspections but denies that it is necessarily due to attempts to evade tax. “Many MSMEs and self-employed workers have not done a correct study of suppliers and buyers. Perhaps initially, some of these economic actors will register losses by combining the effect of the acquisition of goods with the creation of infrastructures,” he concedes.
Granma’s article addresses with Dayamí Roger Hernández, first deputy director of the Holguin Onat, the differences among the defaulters who comply within the same month, although not voluntarily, and the debtors who do not pay at the end of the term and are penalized with a fine and surcharge. To the latter, in a new policy that has turned out to be “necessary” due to the increase in MSMEs (currently 560 in the province), a preventive embargo can be applied until they comply. So far this year, that decision has affected 150 taxpayers.
The penalty for evaders can entail five years of deprivation of liberty, which is extended to between seven and 15 years in the most serious cases, when there are additional crimes such as belonging to an organized network. In these cases, where there have been fraudulent actions to evade payments, paying off the debt does not exempt them from the criminal process.
“It cannot be overlooked that in the context of imposing order and ending illegality, the purpose of educating people in the fulfillment of duties and, with it, making them grow in civility is always present,” the article concludes. It does not address, however, a problem that is the root cause alleged by many Cubans when it comes to tax evasion.
Behind the lack of citizens’ conscience when it comes to complying with the State are the distrust in institutions, the lack of transparency when explaining what public money is used for – the authorities limit themselves to offering percentages of the large budget items, without breaking it down by ministries – and the discomfort generated by the high amounts that are allocated to activities that are currently unproductive, such as the construction of hotels, among others.
*MSMEs – Micro, Small, Medium Enterprises (’mipymes’ in Spanish)
Translated by Regina Anavy
____________
COLLABORATE WITH OUR WORK: The 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.
