Pros and Cons of Self-employment / Laritza Diversent

According to the newspaper Granma, starting in October you can work for yourself in 178 activities. In 83 of them you can hire a labor force. Seven have been added to those previously authorized, and 29 of 40 once prohibited activities are now legal. In nine the ban is maintained because of the lack of a legal market to obtain materials and supplies.

In general terms, self-employment will continue to be a complement to State-run enterprises. Also the regimen of violations will be maintained as will the system of inspections and routine visits from the authorities. The widening of the activities does not include the authorization to buy raw materials wholesale, which will limit the earnings of those who work for themselves, plus with the new regulations they will also have to pay taxes.

Self-employed were obliged to pay taxes on their personal income and to pay registration fees and license renewal fees every two years. With the new regulations they will have to pay sales tax, taxes for public service, employment taxes and social security.

The self-employed, as a general rule, are required to offer their services to individuals in national money, that is Cuban pesos rather than convertible pesos. In reality, they will have to acquire the means to carry out their work and raw materials in the established network of state enterprises, which sell in convertible pesos, and which recently have been very short of supplies. (1 Cuban peso ~ 24 convertible pesos.)

Also, the self-employed must keep official receipts when they buy supplies or the means of production, to demonstrate their legality. According to the Economy Minister, Marino Murillo, at least for the coming years, there will be no wholesale market selling to the self-employed.

Private workers can only trade in their own products. They are prohibited from reselling industrial products or food products that are sold or previously prepared in established state enterprises serving the culinary and food network.

Nor can they prepare or sell milk or dairy products, except if they acquire these products in the established sales network in convertible pesos, and are able to provide invoices and receipts proving their origin.

The new regulations, despite the widening list of activities and the elimination of prohibitions, some of them criminal (hiring labor), are tied to the free trade and demand of the non-State market. These limitations, along with the stepped-up state supervision and inspection, will limit future possibilities for operating a small business.

October 10, 2010