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Archive for August, 2015

Cuba In the 1940s and early 1950s, Havana must have been a jewel of a city. Set against the beautiful Caribbean Sea, the Malecón offers the sea to one side and buildings across the boulevard – some restored, some new, but many crumbling after years of neglect. Perhaps that is the best word to describe the city – crumbling. Of course there are beautiful buildings (the National Capital Building and the National Theatre next door), but across the street, buildings are literally falling down. Much to their credit, Cuban authorities are restoring the most significant buildings that comprise their rich architectural patrimony. That said, much is left to be done and we can only hope that growing commercial contact with the outside world will bring more funds to make possible even more ambitious conservation initiatives.

The streets too are generally in need of repair – the potholes give New Yorkers nothing to complain about. It’s quite surprising that the 1950s-era cars (again, some beautifully restored and maintained, and others less so) can drive the streets without further damage. But there are broad beautiful avenues, many with richly planted medians. Again, a city of contrasts and a city in transition.

On the drive from the airport to downtown Havana (about 25 minutes), my colleague, Richard Ingunza, immediately noticed the lack of advertising. The only billboards or signs posted recognized the glory and successes of the revolution. Also noted was the absolute lack of retail. In fact, in two and one-half days, I only saw two “stores.” One was a high-end kitchen appliance store in one of the two modern office building complexes we visited and the other was a “hole-in-the-wall” with racks of eggs and a line out the door (in fact, business was transacted from the door with patrons walking away with dozens of eggs in self-provided plastic shopping bags – talk about putting all of your eggs in one basket – no egg cartons here).

Despite the poor conditions of the roads and buildings, the people tell a different story. No one appears to be malnourished. No one (well, maybe we saw one person) appears to be homeless or destitute. Much to their credit, everyone we encountered was educated. And everyone we met from hotel bellmen to restaurant staff to our guide and driver to our affiliates working for HLB InterAudit seemed content and “happy.” In the evening, it was extraordinary to see the populace step out onto the streets to mingle, share stories and just enjoy the company of their neighbors. Animated conversations could be seen and heard. Children played and parents laughed, exchanged ideas and had heated discussions, much the same way as was occurring out across the Straits of Florida in neighborhoods across Miami and beyond. For us, Havana is a city of contrasts.

By Kimberlee Phelan, CPA, MBA, Practice Leader, WS+B’s International Services Group | 609.520.1188 | kphelan@withum.com

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cubaOn December 17, 2014, the presidents of Cuba and the United States made a joint announcement that had, until then, seemed to be impossible: Cuba and the United States would embark upon a process of normalizing relations between both countries.

Most are aware of the acrimonious and antagonistic relationship that has existed between both nations, and the history that led to the virtual freezing of that relationship for over 50 years. Irrespective of one’s views on the change, the almost eight months since the historic December 17 announcement have brought increased dialogue between both countries, the reopening of the Cuba’s embassy in Washington and the reopening of the U.S. embassy in Havana later this week. How the relationship between Cuba and the United States develops remains to be seen. What is certain is the general hope that whatever form that relationship takes, it will be for the mutual benefit of both Cubans and Americans alike.

At Withum, members of the firm’s International Services Group met what was announced in December, as well as the revised regulations regarding travel to and commerce with Cuba that were issued by the U.S. Treasury and the Department of Commerce in January, with interest. How will the Cuban economy be impacted? What new economic measures will the Cuban government introduce? What will this mean for the emerging private sector in Cuba? What will this mean for Cuban state companies? What commercial opportunities might emerge for our clients? Each of our questions seemed to trigger another.

We realized quickly that the only way to assess the commercial opportunities that might emerge due to the change in relations between Cuba and the U.S. was to travel to Havana and meet with members of the business community. As a member of HLB International, we have an affiliate in Cuba, Interaudit S.A., that is part of the Ministry of Finances and Prices… so, we simply called.

It was my first call to Cuba. On the line was the CEO of Interaudit, Dra. Elvira Armada Trabas. After explaining the purpose of my call, we were surprised to discover that we had reached out to them at an opportune moment. Interaudit’s management had been recently discussing their need to learn more about the system of accounting, audit and tax practiced in the United States. Provided all of the approvals could be gathered, a visit to Havana would be welcomed.

That simple and brief conversation triggered eight weeks of intense work by both firms in order to make Withum’s exploratory trip to Cuba possible.

The first order of business was to secure an official invitation to travel to Cuba for David Springsteen, Partner and Practice Leader of Withum’s National Tax Services Group, Kimberlee Phelan, Partner and Practice Leader of Withum’s International Services Group and myself, Richard Ingunza, an accountant in Withum’s National and International Tax Services Group in New York. To issue the letter, Interaudit’s management had to secure numerous approvals up the chain of command at the Ministry of Finances and Prices and then similarly up the chain of command at the Ministry of Foreign Relations.

While we waited for the formal invitation letter, we began contacting foreign firms in Havana, active across numerous sectors. We reached out to banks, law firms and professional service firms as well as economists and diplomats. Our approach was universally welcomed and, after many calls, we began to fill out our schedule of meetings.

After two weeks, record time as letters of invitation usually take two months, if not longer, our letter arrived in my email in box. With our schedule in place and our working sessions with Interaudit on Cuban and U.S accounting and tax scheduled too, we turned our attention to the challenge of securing our visas to enter Cuba.

Four weeks before our planned departure, we forwarded our paper work to the Cuban Interest Section in Washington. In order to work through our travel arrangements, we hired a travel consultant to help us with air travel, accommodations, local travel and the documentation for the general license to travel from the U.S. to Cuba to perform professional research and hold professional meetings.

We were told it couldn’t be done. Eight weeks was a minimum to secure a visa, possibly as little as six under extraordinary circumstances. However, we felt that this was an extraordinary time; things were changing and we had to go and see for ourselves. Undeterred, we pressed on and waited for a response.

We were told that if things worked out, they would fall into place at the last minute. Three weeks transpired and we heard nothing from the Cuban Interest Section. Two weeks before our planned departure and we had still not heard back. One week out, we still had no news.

cubaFollow-up calls became more frequent and some of the firms we had on our schedule began to make calls on our behalf to both Cuban officials in Havana and in Washington. Our travel consultants worked the phones reaching out to their contacts and we called and called too.

In the end, it went down to the wire. Three and a half days before our departure, we finally received the news: we were being granted permission to enter Cuba. Three days later, in the late afternoon, we boarded our flight in Miami and headed out across the Straits of Florida towards Havana for what would turn out to be an incredible four day visit.

By Richard Ingunza | 212.829.3219 | ringunza@withum.com

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In a quest to visit Cuba, my colleagues and I found that just getting approval to travel there is a battle. While the U.S. is expected to lift restrictions which will enable U.S. citizens to travel to Cuba for tourism purposes, right now travel is only allowed so long as the visit falls under one of the following 12 approved categories:

  1. Family visits
  2. Official business of the U.S. government, foreign governments and certain intergovernmental organizations
  3. Journalistic activity
  4. Professional research and professional meetings
  5. Educational activities
  6. Religious activities
  7. Public performances, clinics, workshops, athletic and other competitions, and exhibitions
  8. Support for the Cuban people
  9. Humanitarian projects
  10. Activities of private foundations or research or educational institutes
  11. Exportation, importation, or transmission of information or information materials
  12. Certain export transactions that may be considered for authorization under existing regulations and guidelines

Havana, CubaOur travel purposes fell under professional meetings and research. Prior to even applying to the Cuban Interest Section (Cuba’s outpost in the U.S. since neither state had an embassy in each other’s country at the time we were planning our trip), the meetings needed to be networked and arranged. Our HLB affiliate in Havana, HLB InterAudit, was of superb assistance in both agreeing to host us for a day as well as helping us navigate the process of setting up meetings with banks, economists and real estate developers who ensured our visit met the criteria necessary to provoke the interest section to issue the visas required to confirm our travel plans, purchase our airline tickets and travel on to Havana.

Richard Ingunza (Staff, NYC office) worked tirelessly, phoning and e-mailing all necessary parties. Perhaps the hardest part was waiting. . . Our visas were issued less than four days prior to our departure, but less than two months after initially planning the trip. The earlier in advance you plan and apply, the better, but be prepared to wait until the very last moments to have your visa approved and your tickets to Havana confirmed.

We departed early on a Sunday morning from Newark to Miami. After a long layover in Miami, we were finally on a short charter (American Airlines) flight from Miami to Cuba. American Airlines fly with a U.S. marshal and mechanics on board. U.S. airplanes are not allowed to stay overnight in Havana, so if repairs are required, the mechanic must be readily available. The flight was only about 40 minutes long and upon arrival, the passport control and customs process (while quite “low tech”) was simple – unless you happen to be a carrying a massive amount of paper (presentation handouts for our meetings with HLB InterAudit and others). Despite letters confirming meetings and having the presentations in Spanish, multiple levels of cCuba Carustoms officials required consultation prior to allowing the materials to enter the island nation.

Upon exiting the airport, we met our guide and driver who would accompany us nearly everywhere for the next two and one-half days. But first, we did the obvious gawking at the 1950s-era automobiles, which are certainly unique to Cuba (and are a very common sight in Havana).

By Kimberlee Phelan, CPA, MBA, Practice Leader, WS+B’s International Services Group | 609.520.1188 | kphelan@withum.com

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