8 Sept 2016
Doing Business with Cuba (5): Temporary Entry, Samples and Special Development Zones
For traders who are planning to visit Cuba and introduce Cuban importers to their samples, the rules on temporary entry and samples must form part of their pre-trip research. Meanwhile, the Mariel Special Development Zone, which faces the Florida Straits and was established in September 2013, may also be key to success in the Cuban market.
On Temporary Entry and Samples
Cuba has several temporary import regimes in place. Under the same-state temporary importation and exportation regime (admisión temporal de mercancías para su reexportación y reimportación en el mismo estado), it is possible to obtain relief from the payment of import duties and taxes on (i) goods imported into Cuba intended to be re-exported in the same state, and (ii) goods exported from Cuba intended to be re-imported in the same state. Goods must normally be re-exported or re-imported no later than one year from the date of temporary admission or temporary exit, although this deadline may be extended by an additional year if a request is made no later than 30 days from the date of expiration of the original deadline.
Extensions that involve the temporary admission into Cuba of goods for more than two years may only be granted under exceptional circumstances. Such extensions may be granted for equipment, machinery and other non-consumable materials admitted as part of risk contract operations as well as other goods of special interest for the development of the country.
Goods eligible under Cuba’s same-state temporary importation and exportation regime include:
- technical materials and equipment used to exercise a specific profession or trade which are introduced into the country or taken out of the country to perform a specific job or function;
- goods to be exhibited or used in fairs, exhibitions or other events of a technical or cultural nature, including the necessary elements for decorating any stands and advertising materials to promote the goods;
- animals, plants, materials and equipment used in exhibitions or sporting or recreational events;
- apparatus, materials and equipment for laboratories as well as for research, diagnostic and medical/surgical activities;
- construction equipment and other goods for construction activities;
- musical instruments, technical materials, props and other equipment used by artists, orchestras, bands, theatre groups, circuses and the like;
- equipment for mining or geological prospecting and research;
- production equipment and machinery and parts thereof imported or exported to replace similar equipment and machinery that has suffered damage, provisionally provided to the importer or exporter free of charge while repairs on the damaged equipment and machinery are performed in Cuba or overseas;
- packaging that can be identified for re-exportation or re-importation, as long as it is (i) imported or exported full to be re-exported or re-imported empty or full, or (ii) imported or exported empty to be re-exported or re-imported full;
- motor vehicles, airplanes, yachts and other vehicles and vessels;
- containers; and
- other articles of interest to Cuba.
Meanwhile, goods entering into Cuba under the temporary admission for inward processing regime (admisión temporal para perfeccionamiento activo) also benefit from duty/tax relief if they are temporarily imported for further processing in Cuba and re-exported in accordance with certain conditions. Goods must be re-exported in accordance with the specific timeframes established on a case-by-case basis by Cuban authorities. Extensions of up to 120 days may be granted provided a request for an extension is submitted at least one month from the date of expiration of the original deadline. Any duties and taxes owed on the temporarily imported goods must be paid if the required exportation does not take place.
Cuba also operates a duty drawback scheme whereby exporters receive a partial or total reimbursement of any duties paid on imports that are re-exported after undergoing a process of transformation, production or repair in the country, as long as (i) the exportation is beneficial to the national economy, (ii) the exportation is intended to meet export commitments that have not been met through other means, or (iii) the advantages granted to the imported goods do not affect the use of domestic goods in the goods to be exported. Any drawback claims must be made within one year from the date of acceptance of the export declaration. Such claims will only be accepted in instances where the time between the date of import and export is no longer than one year.
Furthermore, the Ministry of Foreign Trade and Foreign Investment (MINCEX) may issue a temporary code, valid for a period of three months, to an authorised Cuban importing company to allow it to import samples from new suppliers. Commercial samples with an insignificant value imported via courier are normally exempt from import duties. In addition, foreign companies with a commercial presence in Cuba may request authorisation to import commercial samples and promotional materials, although duties may be assessed on any such imports.
The Mariel Special Development Zone
Established in September 2013, the Mariel Special Development Zone, which faces the Florida Straits, is a special zone located about 45 kilometres west of Cuba's capital, Havana. It was created to promote sustainable economic development by attracting foreign investment and fostering technological innovation and the emergence of industrial clusters. The zone operates under a special tax and customs regime but differs from a free trade zone in that goods produced by a company authorised to operate in Mariel may either be exported or sold in the domestic market to a Cuban legal entity, but not to Cuban persons.
Foreign investments in the zone benefit from certain tax benefits, including exemptions from tax on profits and on labour. In addition, companies benefit from a one-year exemption from sales tax and a reduced 1% rate thereafter. While inputs and raw materials imported into the zone are subject to import duties, exemptions may be obtained under the available customs regimes for goods that are subsequently exported. Imports of equipment and machinery for use in production activities in the zone are, in principle, exempt from import duties.
Priority sectors within the zone include biotechnology and pharmaceuticals; renewable energy; agriculture and agro-industrial; tourism; real estate; packaging; telecommunications and information technology; and infrastructure investments.