FOREIGN INVESTMENT IN CUBA

1. FOREIGN INVESTMENT IN CUBA Republic of Slovenia October 15, 2013

2. VI Congress of the Communist Party of Cuba. April 18, 2011 As a result of the updating of the Cuban Economic Model approved at the VI Congress of the Cuba Communist Party, emphasis has been made on: • Continuing the promotion of foreign capital as a supplement to national investment efforts, in sectors of interest for the country, according to the needs and priorities for economic and social development. • Favoring the diversification in terms of the participation of the business community from various countries, as part of the investment promotion process.

3. Benefits of foreign investmentfor Cuba access to new and advanced technologies, management methods, modernization of its industries, higher productive efficiency, improvement of quality of products and services to be offered, higher competitiveness abroad, external financing at the medium and long term, diversification and expansion of export markets, increase in exports of Cuban products, substitution of imports, development of infrastructures, creation of new job sources.

4. Advantages of investing in Cuba • The conception of foreign investment with a strategic focus/role in the national economy • Highly qualified labor • Political, social and legal stability • Safety for foreign personnel • Good geographical location • Governmental support for research and technological innovations

5. Legal Framework for Foreign Investment in Cuba Law No. 77/95: “Foreign Investment Law” • Joint Venture • International Economic Association Contract • Totally Foreign Capital Company Decision 5290/04 of the Executive Committee of the Council of Ministers • Contracts for cooperated production of goods or for the rendering of services • Production and/or service management contracts • Hotel management contracts

6. Foreign Capital Investment in Cuba Joint Venture: Cuban commercial company which adopts the form of a nominal share corporation, in which one or more national investors and one or more foreign investors can participate. International Economic Association Contract: Agreement between one or more national investors and one or more foreign investors for joint purposes without the establishment of a legal entity different from those of the Parties. Totally Foreign Capital company: Commercial entity with foreign capital, without the involvement of any national investor.

7. MANAGEMENT CONTRACTS FOR PRODUCTS AND/OR SERVICES A contract by which a State-owned entity or a private Cuban commercial company hires a foreign juridical person to manage one or more production lines, or a production facility or services, for a certain period of time, in exchange for payment of a mutually agreed price, conditioned tothe results of the management carried out according to the agreed indicators.

8. HOTEL ADMINISTRATION CONTRACTS Written agreement between the titleholder of a Hotel and a professional management hotel company, by means of which the Manager accepts the responsibility granted him by the Hotel of assuming and efficiently performing the management and commercialization of the services granted by the hotel in exchange for the payment of fees and without any transfer of property or of any other real right on the hotel.

9. PARTNERS’ CONTRIBUTIONS TO THE SHARE CAPITAL • freely convertible currency • machinery, equipment or other physical or tangible goods • intellectual property rights and other intangible goods rights • Property rights over personal items and real estate, and other rights over these, including usufruct and surface rights; and • other goods and rights

10. SPECIAL TAX SCHEDULE Applicable to: • joint ventures • foreign investors and national investors which are parties to the international economic association contracts Benefits comprises: • Income Taxes are levied at a rate of 30% of net taxable income • Utilization of the Labor Force is levied at a rate of 11% for the current taxation rate • Social Security Contribution is covered by a taxation rate of 14%

11. Guarantees to Investors -The Government guarantees to the foreign investors the free transfer abroad, in freely convertible currency, tax free or any fee related to the transfer, of: a) net profits or dividends obtained as a result of the investment; and b) amounts they should receive in cases of expropriation, liquidation or termination of the association, and regarding the sale of shares or participations. - Foreign citizens working in an international economic association, or in a totally foreign capital company, have the right to transfer abroad the income they receive. - Concession of fiscal incentives subject to a special tax system

12. About negotiation and authorization of the types of foreign investment in Cuba

13. Aspects of interest during negotiation and authorization of the modalities of foreign investment • During negotiations, both parties startto prepare the documents to be presented for the incorporation/authorization of the business i.e. Association Agreement, Social Statutes, Feasibility Study, etc. • Any consultancy services could be contracted in order to draw up the Incorporation documents and the Feasibility Study. • At that time, the Cuban Part should carry out formalities related to the legalization of the ground, conciliation with the Register of Properties, procedures regarding to the environment, etc. • If one of the Parties has legal documents related to Intellectual Property, they must be countersigned by the Industrial Property Office of Cuba.

14. Of Interest to the Foreign Investor • The following documents must be presented to accredit your condition: • Deed of constitution duly legalized and registered, • Inscription in the Mercantile Registry (Business Registry) in the country of origin, at least 6 months since its issuance, • Financial Reports of the last business year, certified by an independent entity, • Bank references, • Sponsorship Letter from Head Office, in the required cases.

15. GOVERNMENT AUTHORIZATION Proposals for joint business are presented by the sponsoring entities/ministries to the Ministry of Foreign Trade and Foreign Investment (MINCEX). MINCEX evaluates the business proposal along with other public institutions and ministries. Later on, MINCEX is in charge of submitting the proposal to the Executive Committee of the Council of Ministers for its final approval. After the business has been approved by the government and prior to initiating operations, it should be registered in the Mercantile Registry within a term of 30 natural days after the date of authorization.

16. THANK YOU Republic of Slovenia October 15, 2013