Israel – Cuba Tax Treaty

Applicability of the MLI

Israel has signed the Multilateral Convention, commonly known as the MLI. The MLI is a convention that is meant to fix double taxation treaties according to the BEPS framework.

Israel signed the MLI on the 7th of June 2017, with its provisions entering into force on the 1st of January 2019. Cuba, on the other hand, has not proceeded with the signing of the Convention.

Residency for Tax Purposes in Cuba

Residence of an Individual

There is no specific definition of residence in the Cuban Income Tax Law. Instead, the law refers to tax resident individuals as Cubans and any non-Cuban with permanent residence in Cuba. Resident individuals are taxed on their worldwide income.

To read about how an individual is considered a resident of Israel, click here.

Residency of a Company

Residence for corporate income tax purposes is not defined in Cuban Income Tax Law.

To learn about how a company is considered a resident of Israel, click here.

The Tax System in Cuba

Cuba Tax Authority is called the National Office of Tax Administration (Oficina Nacional de Administración Tributaria (ONAT).

Income Taxation: 15% to 50%

Taxation of Companies and Branches: 35%

VAT: NA

Capital Gains Tax: 35%

Withholding Tax

Inheritance Tax Cuba

Inheritance tax is levied upon inherited immovable property and movable property. The rates range from 2% to 65% depending on the size of the inheritance and the level of the relationship with the deceased.

Relocation to Cuba

Foreign investors in Cuba have, in turn, equal rights to business and property purchases in Cuba, and are subjected to the same level of tax. The government does not engage in competition with private companies and has not nationalized any industry. Foreign exchange regulations are free, with small taxes on capital transactions to overseas countries.

The government promotes investments that bring high technology and enhance infrastructure. In 2015, a new law offered tax incentives and created a special economic zone to attract foreign investment. Cuba has tried to reform its investment legislation, and more recent changes have in particular been made to attract even more foreign capital, for example, in the Mariel Special Economic Zone.

Cuba has an estimated 500 Sephardic and Ashkenazi Jews. The Jewish community celebrated its 100th anniversary in December 2006. At the end of one hundred years of ups and downs, the Cuban Jewish community is thriving in stability and in its own renewed vitality, free to practice Judaism. Just like the rest of society, they are restricted by finite resources.

Real Estate Taxation in Cuba

Transfers of movable or immovable property within the Republic of Cuba are subject to a transfer tax, at rates ranging between 1 and 4%, and these rates depend on the nature of the transfer.

Real estate tax is levied each year on the resident and nonresident companies and persons owning residential property and land in Cuba. The real estate tax rate is 2% of the assessed value. The taxable value is usually the market value of the property on the property title.

Transfer of Funds from Israel to Cuba

According to section 170(a) of the Israeli Income Tax Ordinance, all payments transferred to non-Israeli residents are subject to a 25% withholding tax. However, this tax can be reduced or even waived if certain conditions are met. Our firm handles withholding tax matters with the Israeli Tax Authority. 

In addition to assisting with withholding tax matters, our firm also helps with other issues related to transferring funds abroad. This includes providing an accountant’s approval regarding the payment of taxes, reviewing additional actions required under the CRS standard, and more. 

Moreover, banks often raise many difficulties and charge high fees for converting shekels into other currencies. Therefore, consulting with a specialist before transferring the funds is highly recommended, click here to contact us. 

For more information on money transfers abroad, click here. 

Types of Business Entities in Cuba

Cuban Law No. 118/2014, “On Foreign Investments,” outlines the legal entities designed to facilitate foreign investment. The main types include:

Mixed Enterprises (Empresas Mixtas)

 Mixed enterprises are joint ventures with legal personalities distinct from their founding parties, formed as joint-stock companies. They require public notarization for validity and are governed by internal statutes and Cuban law. Mixed enterprises can operate within and outside Cuba, create branches, and adjust shareholders subject to authorization.

International Economic Association Contracts (Contratos de Asociación Económica Internacional)

These contracts do not create a new legal entity. They allow partners to conduct activities jointly, with flexible agreements tailored to their interests. Examples include contracts for hotel management, professional services, or natural resource exploration. Contributions remain distinct but may form a common fund for specific activities, and operations are subject to approval and legal oversight.

Wholly Foreign-Owned Enterprises (Empresas de Capital Totalmente Extranjero)

These entities are entirely controlled by foreign investors who assume all rights and responsibilities. They can operate as individuals, subsidiaries, or branches, requiring registration with the Commercial Registry. Subsidiaries may create offices or branches domestically or internationally and are subject to dissolution and liquidation rules in accordance with their statutes and Cuban law.

Cuba Double Tax Treaties