The Cuban government closes 15 small and medium-sized businesses due to irregularities in accounting

The regime boasts of having intensified control, but experts affirm that the amount of money that escapes from public coffers due to tax evasion is unknown.

CiberCuba Editorial

11/07/2024 - 6:19pm (GMT-5)

The Cuban government closed 15 micro, small, and medium-sized enterprises (MSMEs) this year that had irregularities in their accounting.

Judith Navarro Ricardo, legal specialist from the National Office of Tax Administration (ONAT), revealed that incorrect accounting practices were detected, such as classifying equipment purchases as direct expenses instead of inventory, which artificially reduces the company's profit.

There have also been issues with controls on primary records, such as financial statements, which in many cases are either missing or concealed.

Navarro Ricardo reported that after verifying these facts, temporary or permanent closure was ordered, depending on the severity of the violation.

At the end of May, there are 15 micro, small, and medium-sized enterprises (MSMEs) in this situation due to irregularities in their accounting. Some of these cases may result in tax evasion crimes," a source told Cubadebate.

"The SME that does not keep proper accounting records and, in addition, does not correctly fulfill its tax obligations, demonstrates an intention to evade, so we have the right to proceed with the report," he emphasized.

Recently, during an inspection carried out at a micro, small, and medium-sized enterprise in Havana, inspectors reviewed the tax on the use of labor force, which is calculated based on the total remuneration paid to employees, applying a tax rate of 5%.

The small and medium-sized enterprise had not included the paid incentives to the workers in the calculation. After determining the amount of the debt, the business owner was assessed with a surcharge and a fine, although it was concluded that the non-compliance was not intentional, but rather an incorrect interpretation of the regulations.

The National Office of Tax Administration (ONAT) has identified the main modes of operation or types of tax evasion in Cuba: declaring and paying below the actual income earned, omitting income obtained from operations outside the country, and using individuals who are not the true owners to conceal the existence of multiple businesses.

The government boasts of having intensified its control actions, but experts in the oversight activity affirm that the amount of money escaping from public coffers due to tax evasion is unknown.

Belkis Pino Hernández, Deputy Chief of ONAT, reported that by the end of 2023 and up to May 2024, 210 reports of alleged tax evasion were submitted: 207 by natural persons and three by legal entities.

Out of the total, 30 files were archived for paying off the debt, 117 cases were filed, and around 63 are still pending.

"We are still dissatisfied, and above all, we have to be more agile when working on these procedures, because only six cases of final judgment have been issued: two in Ciego de Ávila, two in Camagüey, one in Santiago de Cuba, and another in Holguin," he detailed.

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