The Cuban Government has announced the implementation of "preventive seizures" as an auxiliary measure to ensure compliance with tax obligations. This measure aims to address tax evasion, a topic that has garnered significant interest in recent months.
During a session of the Economic Affairs Commission of the National Assembly of People's Power (ANPP) held this past Wednesday, July 17, Vladimir Regueiro Ale, head of the Ministry of Finance and Prices, unveiled the proposal to expand the scope of preventive seizures. The policy proposal includes broadening the reach of preventive seizures to secure debt collection, extending definitions of responsibilities for personal income tax withholders, and setting a minimum amount required for processing refunds of undue or excess payments, as reported by the official newspaper Granma.
However, the official publication of the Communist Party of Cuba (PCC), which emphasizes the "need for a Tax Law tailored to the current economic scenario," fails to mention the potential causes and consequences of implementing such a measure.
It is important to highlight that "preventive seizure" is a precautionary measure aimed at ensuring taxpayers fulfill their tax obligations. This measure allows the tax authority to immobilize or seize taxpayer assets until the outstanding tax debt is resolved.
Understanding Preventive Seizures
Key aspects of this measure focus on guaranteeing the payment of tax debts owed to the tax administration. It also serves to prevent debtors from disposing of their assets before the debt is collected. The procedure often does not require a prior judicial order. The tax administration notifies the taxpayer and relevant institutions (such as banks) about the seizure.
Movable and immovable assets, bank accounts, salaries, and credit rights, among others, can be seized. The duration of the seizure remains until the taxpayer fulfills their tax obligations, either by paying the debt or providing necessary guarantees.
Taxpayers should be aware of their rights to be notified of the seizure, to contest the measure before competent authorities, and to present evidence in their defense.
The regime has taken measures against tax evaders on several occasions. In 2022, they restricted travel abroad and entry into the country for taxpayers with "significant" debts to the state, until they settle their obligations. The ONAT signed an agreement with the Directorate of Identification, Immigration, and Foreigners (DIIE) of the Ministry of the Interior, backed by Law No.113 of the Tax System.
In mid-2024, the government enforced a migration regulation preventing 200 individuals in Sancti Spíritus from leaving the country due to allegedly underreporting their income. Tax evaders have also faced judicial convictions, such as the case in 2023 involving two citizens from Santa Clara who were convicted for tax evasion amounting to over six million Cuban pesos combined.
In the first four months of 2024, ONAT detected tax evasion exceeding 800 million pesos. Irregularities included outdated, manipulated, or altered books, records, and subledgers, cancellations of receivables without documentary support, and failure to declare contracted labor force.
FAQs on Cuba's Preventive Seizures for Debt Collection
To provide further clarity on the Cuban government's new policies regarding preventive seizures, we have compiled a list of frequently asked questions and their answers.
What is a preventive seizure in Cuba's tax system?
A preventive seizure is a precautionary measure allowing tax authorities to immobilize or seize a taxpayer's assets to ensure compliance with tax obligations until the debt is resolved.
What assets can be affected by a preventive seizure?
Assets that can be seized include movable and immovable property, bank accounts, salaries, and credit rights among others.
Can taxpayers contest a preventive seizure?
Yes, taxpayers have the right to be notified of the seizure, to contest the measure before competent authorities, and to present evidence in their defense.