Cuba approves law aimed at attracting foreign investment

Cuban politicians have approved a law to make it more attractive for foreign investors to do business in and with the country, a measure seen as vital if the island's struggling economy is to improve.

Meeting in an extraordinary session, more than 600 deputies replaced a 1995 foreign investment law that has attracted less overseas capital than the island's Communist leaders had hoped, contributing to sluggish growth.

The new investment law continues the structural economic reforms under way in Cuba since President Raul Castro took over from his ailing brother Fidel in 2008.

Saturday's afternoon newscast on state television announced the measure's approval, according to the Associated Press.

Foreign media were not given access to the closed-door meeting, but details of the legislation emerged in official media.

It would cut taxes on profits by about half, to 15 percent, and make companies exempt from paying taxes for the first eight years of operation.

An exception for companies that work in the exploitation of natural resources, such as nickel or fossil fuels, would establish taxation rates in such cases as high as 50 percent.

Foreigners doing business with the island would be exempt from paying personal income tax. Wholly foreign-owned investment projects would be explicitly allowed, a rarity for Cuba.

Foreign investment will reportedly be allowed in all sectors, except health care and education.

The investment law is a fundamental part of President Raul Castro's package of reforms, begun in 2008 with the stated goal of "updating" Cuba's economic model.

Hundreds of thousands of Cubans are now legally working independently of the state in a nascent private sector, though authorities say they are not abandoning socialism.

The body usually meets twice a year, in July and December. Castro announced Saturday's extraordinary session late last year.

Cuba's economy expanded 2.7 percent last year, below targets and weak for a developing nation.