Cuban parliament on Saturday approved a new foreign investment law aimed at attracting badly needed capital through tax cuts, a measure officials said was vital for the development of the island country.
The National Assembly passed the legislation unanimously in an extraordinary session chaired by President Raul Castro and National Assembly chairman Esteban Lazo, local news agency Prensa Latina reported.
The new law will be put into force in 90 days after being published by Official Gazette of the Republic.
The new legislation offers better tax advantages to foreign investors by halving profits tax from 30 percent to 15 percent and exempting investors from paying it for the first eight years of operation.
Also, the legislation promises foreigners necessary investment security and non-expropriation guarantees, except for reasons of public utility or social interest, and with the due compensation, according to reports of the official media.
These incentives are offered to joint ventures with the Cuban state and partnerships linking foreign and Cuban companies, official media reports said.
Under the new law, all economic sectors will be open to foreign investment, except public healthcare, education and security, excluding the business side of the armed forces, officials said.
The new law is to replace the current law that came into force since September 1995, when the then government headed by Fidel Castro allowed foreign investment in some sectors, such as tourism, in a bid to address the crisis created after the downfall of the Soviet Union, the main ideological and economic ally of the island.
Vice President of the Council of Ministers, Marino Murillo, said the new investment law is badly needed for Cuba's national development.
"Cuba needs from 2 billion US dollars to 2.5 billion dollars per year in direct foreign investment to advance its socialist socio-economic model, prosperous and sustainable," Murillo told lawmakers in comments broadcast on state television.
"Not using those sources would retard national development," he said at the closed-door meeting.
On Friday night, Minister of Foreign Trade and Investment, Rodrigo Malmierca, argued for the necessity for attracting foreign investors.
"If the economy does not grow at levels of about 7 percent of the gross domestic product ... we will not be able to develop," he told local television. "For this to happen, we need 2 billion to 2. 5 billion US dollars to come in foreign investment every year."
A week ago, Malmierca said the new investment law was designed to spur economic development "without abandoning our socialist project," by offering "guarantees, incentives and better means to attract investment."
Cuban leader Raul Castro said in February that Cuba has "a compelling need" to attract foreign investment to boost the country's economic and social development.
Castro announced the extraordinary session late last year as Cuba's National Assembly usually meets twice a year, in July and December respectively.