Cuba’s National Assembly has passed a new foreign investment law on Saturday that aims to make the Communist-run island more attractive to foreign businesses.

The law slashes taxes on profits from 30% to 15% and gives new investors eight years of exemption from paying taxes.

The change is seen as a key part of President Raul Castro’s reform package, aiming to modernize Cuba’s economy.

The government in Havana opened the country to foreign capital in 1995.

Cuba’s National Assembly has passed a new foreign investment law that aims to make the country more attractive to foreign businesses

However, in recent years, Cuba has seen a fall in foreign investment and moderate economic growth. The economy grew by 2.7% in 2013, well below the government’s 7% target.

Cuba’s economy is seen as highly centralized and inefficient, but almost 500,000 Cubans now have licenses to operate small, private businesses.

Presenting the law at a special televised session of the assembly, ministers were at pains to stress that the government was not “selling” the country but taking steps to ensure its prosperity as a socialist state.

The text of the bill has not yet been released but is expected to introduce several incentives to investment when it comes into force in three months’ time:

• Investors will be lured into joint ventures with the state and Cuban companies
• The process of approving foreign investment will be speeded up
• Legal protection will aim to reinforce investors’ confidence in the Communist government
• Taxes will be cut to 15% on profits in most areas, although special conditions will be set for investment in natural resources
• Tax on nickel and fossil fuel investment could be as high as 50%

The reform is not expected to attract investment from the large Cuban community in the US, under the 50 year-old US economic embargo.

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