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New measures in Cuba on the exercise of private activity

| Publications | Cuban Desk

On August 19, 2021, the regulations governing the exercise of private activity, including (i) self-employed workers, (ii) MSMEs and (iii) non-agricultural cooperatives, were published in the Official Gazette of Cuba No. 94 Ordinary

The regulations governing the exercise of private activity, including (i) self-employed workers, (ii) SMMEs and (iii) non-agricultural cooperatives, were published in the Ordinary Official Gazette of Cuba No. 94 on 19th August 2021. The regulations are developed through the Decree Laws and Decrees that regulate each of the three activities, as well as the complementary regulations of the Central Bank of Cuba, and the Ministries of Domestic Trade (Registration in the Central Commercial Registry of self-employed workers), Communications, Economy and Planning (Procedure for the creation, merger, spin-off and extinction of micro, small and medium enterprises and non-agricultural cooperatives), Ministry of Finance and Prices (tax regime), Food Industry, Public Health, Transport, and the Institute of Physical Planning.

In relation to SMMEs, the most representative provisions are Decree-Law 46 on micro, small and medium-sized enterprises, Decree No. 49 on the activities to be carried out by private micro, small and medium-sized enterprises, non-agricultural cooperatives and self-employed workers, hereinafter Decree No. 49, and Resolution No. 63/202 of the Ministry of Economy and Planning, which establishes the procedure for the creation, merger, spin-off and extinction of micro, small and medium-sized enterprises and non-agricultural cooperatives.

The most representative aspects of MSMEs can be summarised as follows:

- Their establishment is authorised by the Ministry of Economy and Planning, upon application by the representative of the aspiring founding partners designated by them, or by the sole partner.

- They may consist of one or more partners, be state-owned, private or mixed, and are classified according to the indicator of the number of employed persons, including partners, as follows: (a) Micro enterprise: whose range of employed persons is from 1 to 10 persons, (b) Small enterprise: whose range of employed persons is from 11 to 35 persons; (c) Medium enterprise: whose range of employed persons is from 36 to 100 persons.

- As part of their autonomy, they have the power to export and import in accordance with current legislation, but it is not made clear whether this means that they must do so through companies authorised by MINCEX. However, the regulations on self-employed workers do state that they must export and import through authorised companies.

- They are constituted as commercial companies that take the form of a limited liability company, by means of a public deed, which is registered in the Mercantile Register and with its registration they acquire legal personality. The share capital is determined in the articles of association and is constituted by the contributions made by the shareholders, who take up all the shares in the company. Contributions may be made in the form of money and other assets or property rights susceptible of economic valuation; in the case of monetary contributions, the currency is the Cuban peso. Under no circumstances may work or services be contributed to the share capital. The initial share capital is paid in full at the time of incorporation, and no minimum share capital is required.

- Partners can be: (a) Of privately owned MSMEs: natural persons permanently resident in Cuba, over 18 years of age; (b) Of state-owned MSMEs: legal persons approved by the Ministry of Economy and Planning; (c) Of mixed-ownership MSMEs: natural and legal persons of different types of ownership. As can be seen, by referring to privately owned MSMEs, foreign investors are indirectly excluded. And in the case of mixed-ownership MSMEs, the reference to legal persons of different types of ownership could be related to Cuban commercial companies and cooperatives, because there is no direct reference to foreign investment, but neither is it excluded.

- The following are incompatible with the status of partner when being a natural person of a MSME: (a) being a partner of another MSME; (b) working as a State or Government employee or official or occupying elective positions of a professional nature in a State body, in the case of partners of private MSMEs; and (c) other limitations established by the legislation in force.

- The activities that private micro, small and medium-sized enterprises, non-agricultural cooperatives and self-employed workers may carry out are those considered lawful, except for those regulated in the list of unauthorised activities, which is annexed to Decree No. 49. The extensive list excludes, among others, real estate services (except for the purchase and sale and lease of housing, rooms and spaces between individuals), legal, accounting, business management, advertising, health and education services. 

You can download the full PDF file here.

For further information please contact:

Ignacio Aparicio | Partner Corporate / M&A and Director of the Cuban Desk

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