New OFAC Regulation Benefits MLB Players; Performers and Teachers Too
A changes to the Cuban Assets Control Regulations (CACR), announced yesterday and effective today, issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury was primarily to benefit Republic of Cuba nationals who will sign contracts with Major League Baseball (MLB) teams.
The new regulation stipulates that salary and other compensation may be paid to a Republic of Cuba national by an entity subject to United States law provided that the payments are not subject to a “special tax assessment” by the government of the Republic of Cuba.
Since the government of the Republic of Cuba had regulations governing outside income prior to the issuance of the OFAC regulation, and as the regulations are not "category specific," the new OFAC regulation would apply to baseball players. The Obama Administration did not want to provide any "fees" to the government of the Republic of Cuba.
The new regulation also enables performers and teachers visiting the United States to receive more than expenses and a per diem.
New OFAC Regulation
§ 515.571 Certain transactions incident to travel to, from, and within the United States by Cuban nationals.
(a) * * *
All transactions ordinarily incident to the Cuban national’s presence in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization issued by the U.S. government.
This paragraph (a)(5) authorizes the receipt of salary or other compensation by a national of Cuba consistent with the individual’s non-immigrant status or non-immigrant travel authorization, provided that national of Cuba is not subject to any special tax assessments by the Cuban government in connection with the receipt of the salary or other compensation.
Examples of other transactions authorized by this paragraph (a)(5) include: the payment of tuition to a U.S. educational institution by a national of Cuba issued a student (F-1) visa, and the rental of a stage by a group of Cubans issued performance (P-2) visas.
Note to paragraph (a)(5): This paragraph authorizes banking institutions, as defined in
§515.314, to open and maintain accounts solely in the name of a Cuban national who is present in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization for use while the Cuban national is located in the United States in such status, and to close such accounts prior to departure. See paragraph (b) of this section for an authorization for banking institutions to maintain accounts opened pursuant to this paragraph while the Cuban national is located outside the United States.
Republic of Cuba Income Tax Regulations On Outside Income (Spanish & English)
ARTICULO 19: Son sujetos de este Impuesto las personas naturales cubanas y extranjeras con residencia permanente en el territorio nacional, por los ingresos obtenidos cualquiera que sea el país de origen de estos ingresos.
ARTICULO 28: Las personas naturales cubanas y extranjeras con residencia permanente en el territorio nacional, por los ingresos que perciban de contratos individuales de trabajo en el exterior, pagarán sobre el total de los mismos un cuatro por ciento (4%), sin considerar deducción alguna salvo los pagos de las comisiones que haya realizado a entidades cubanas a través de las cuales se contrató.
Se entenderá como contrato individual de trabajo en el exterior la labor remunerada que realice un ciudadano cubano en otro país por gestión propia o por medio de una entidad cubana, sin estar amparado en un convenio de colaboración, contrato de exportación de servicio u otro de similar naturaleza.
El valor mínimo a liquidar es de veinte pesos convertibles (20.00 CUC) mensuales, aplicando las reglas de conversión establecidas en el artículo 23.
ARTICLE 19: They are subject to this tax Cuban and foreign natural persons with permanent residence in the country, the income obtained whatever the country of origin of these revenues.
Article 28: The Cuban and foreign natural persons with permanent residence in the national territory, by income received from individual employment contracts abroad, will pay the total of these four percent (4%), regardless of deduction except any commission payments you have made to Cuban entities through which hired.
It shall mean the individual employment contract outside the paid work to make a Cuban citizen in another country's own management or by a Cuban entity, without being covered by a cooperation agreement, export contract of service or other similar nature.
The minimum value to be settled is twenty monthly convertible pesos (20.00 CUC), applying the conversion rules set out in Article 23.