Putin’s Adviser for Cuba Calls for More Digitization So That Private Companies Pay Taxes

Titov reported that he was still “waiting for a response” from the “Government of the Republic of Cuba” to his proposals. (Cinemaplex.ru)

14ymedio bigger14ymedio, Havana, 29 November 2023 — Businessman Boris Titov, president of the Russia-Cuba Business Council and interpreter of the Kremlin’s will for business with Havana, recommended on Tuesday to the Central Bank of Cuba (BCC) to accelerate the “digitalization of relations” between private companies and the State. The adviser argued that, “according to various estimates,” between 50% and 70% of the Island’s private businesses operate “in the shadows,” cheating the authorities; hence, the creation of a “more manageable” tax service is indispensable.

As usual, Titov started from the Russian experience after the fall of the Soviet Union to illustrate the need for new rules in the Cuban economic game. “The path we propose is the gradual introduction of market relations. Allow private companies to freely set prices in national currency,” he summarized. According to the businessman, the result will be a temporary – and probably disproportionate – increase in prices, but, in the long run, the black market will be mortally wounded thanks to “legal” competition.

Titov invited the directors of the BCC and the Island’s tax institutions, who met with him for a “round table” to fully enter a phase of “market reform,” whose cornerstone is the development of private companies. In that project – one of the fundamental steps of its usual list of recommendations to Havana – the Island will have to count on the advice of Russia.

Titov invited the directors of the BCC and the Island’s tax institutions to fully enter a phase of “market reform”

It is the Russian “digital superservice,” which only an ally with the necessary technological development can provide, and the key to reform, said Titov. Moscow’s “expansion of activities” will prevent the process from excessively benefiting private companies and will operate in response to one of the Government’s top concerns: “maintaining state control over strategic areas,” he admitted.

If private initiative is developed and multiplied, in the long run the BCC will be able to increase its profits “through the expansion of the tax base (taxes).” But, at the moment, taxes cannot be raised until private companies have the financial strength to pay them.

The “superservice” offered by Russia consists of three elements: electronic records, electronic reports and online cash registers. Through the registration – “where everything should begin” – the Government will make a map of the “real structure of the economy” and draw up plans to better manage it. There can be no private companies outside the system, because the registry will give access to other indispensable services, without which it will be impossible to operate properly.

For this, Titov insisted, technology is needed. Hence, Havana and Moscow are considering “creating a new special bank to serve the private companies (possibly together with a Russian partner).” Business owners’ problems in accessing loans, as well as taxes and other obstacles to their development, will be solved if there is a bank that serves them as a priority, he argued.

However, he warned, Cuba will continue to need “a different macroeconomic regulation,” which includes reforms in “exchange rate issues and established salary levels,” about which he did not want to go into details.

Cuba will continue to need “different macroeconomic regulation,” which includes reforms in “exchange rate issues and established salary levels

No agreement came out of the meeting. Titov reported that he was still “waiting for a response” from the “Government of the Republic of Cuba,” and that later more details of the “digital superservice” that Moscow plans to implement on the Island would be revealed.

Since last January, the rapprochement between Moscow and Havana has had ups and downs. Although at the beginning of the year the process seemed to go at full speed – Titov himself, in addition to senior Russian officials, appeared in the official press more often – the Island has taken with calm everything that sounds like profound reform. Diplomatic and military approaches have been of more interest to the Cuban authorities, although the information that several Cuban mercenaries were fighting on the Russian side during the invasion of Ukraine again slowed the conversation between both parties.

However, last Saturday the official press announced that the “technological deployment” for the use of Russian MIR cards throughout the Island was ready. The tourist facilities of Havana, Varadero and the Cayería Norte of Ciego de Ávila and Camagüey – though not those of Villa Clara – already have this possibility, reported the Minister of Tourism Juan Carlos García Granda.

“The Russian payment system will favor the transactions of tourists and businessmen from Russia on the Island. Likewise, it can become an alternative to circumvent the implications of blockades and sanctions and will consolidate its commercial ties in sectors such as energy,” celebrated the article in Cubadebate, which was soon filled with comments from readers with the same concern: “The Russians have never been faithful to Cuba. Not even to themselves.”

Translated by Regina Anavy


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