Monetary restructuring A foreign investment perspective
Information Report
January 2021 Monetary restructuring Introduction
Currency unification in Cuba has long been considered a priority reform for the Cuban Government. After a significant amount of time studying and reviewing unification models, the Cuban State announced on December 10, 2020 that the currency unification would finally take place on January 1, 2021 with a six-month transition period for the CUC (Cuban convertible peso) to be phased out of the economy, leaving the CUP as the only national currency. It was also announced that the unification would be accompanied by a Proceso de Ordenamiento Monetario (“POM”), a process of monetary restructuring that aims at getting rid of inefficiencies in the economy and giving the Cuban economy a more solid base from which to move forward.
“MORE THAN 100 SEPARATE PIECES OF LEGISLATION HAVE BEEN ISSUED”
Since this initial declaration, the Council of Ministers, along with its subordinate ministries, have issued a raft of decrees, law decrees and resolutions designed to regulate the transition into the new “unified” economy. At the center of this legislative program is Decree–Law 17/2020, which sets out the framework and guiding principles for the monetary restructuring. Indeed, as part of this legislative program, over 100 separate pieces of legislation have been issued by the Council of Ministers and its delegate ministries covering a broad range of topics, from price setting and salary levels to accounting guidelines and government budgeting—a summary table of this legislation has been attached as an appendix to this report. In addition, this legislation should be read in conjunction with the many significant and complementary economic reforms undertaken by Cuba during 2020— see the previous note ‘Cuba, presente y futuro: principales reformas legislativas aprobadas durante 2020’ issued by EY Cuba in December 2020.
Notwithstanding the more than 1,000 pages of legislation issued in December 2020, Cuba continues to consider further regulations associated with the monetary restructuring as the application of new rules are further defined and clarified. As such, further legislation and regulation should be expected to be issued in 2021 as this complex economic process is fully implemented.
2 Monetary restructuring Introduction
Overview of Decree–Law 17/2020 on the Implementation of the Monetary Restructuring Process Decree–Law 17/2020 is the overarching framework that is the reference point for all regulations related to the monetary restructuring process. This decree–law sets out the four key objectives behind the new monetary scheme:
Fig 1.1 – Objectives of Decree–Law 17 I. Monetary restructuring and exchange rate unification II. Elimination of excessive subsidies and unnecessary free goods and services III. Correction of relative prices paid by legal entities (e.g. companies) IV. Transformation of income distribution in terms of salaries, pensions and social benefits
As the main legal instrument for the implementation of the monetary restructuring and exchange rate unification, this decree sets out the following key provisions:
► The monetary restructuring and exchange rate unification will take effect from January 1, 2021.
► As a result of the monetary restructuring, the CUC will be removed from circulation in a term of 180 days.
► During the abovementioned term of 180 days, CUCs may be used by individuals in the retail market or exchanged to Cuban pesos at banks and exchange offices.
► As a result of the monetary restructuring, following the 180-day period, the CUP will be the only legal tender in Cuba.
► In authorized cases, natural and legal persons may also use foreign currencies in transactions.
► The exchange rate of the Cuban peso against foreign currencies is determined by the Central Bank and is available at the Central Bank website—at the time of writing CUP/USD 24.
► As a result of the currency unification, the exchange rate of the CUP against foreign currencies is devalued for legal persons—from 1 CUP per USD down to 24 CUP per USD.
Beyond these key provisions, Decree–Law 17 also contains other important stipulations. It announces the start of a number of processes aimed at correcting existing wholesale and retail prices, eliminating excessive subsidies and carrying out a comprehensive reform of salaries, pensions and social security benefits.
3 Monetary restructuring A foreign investment perspective
Impact on foreign investment It is important to note that foreign investment is not the focus of the ordenamiento monetario; quite the opposite: this is a restructuring of the economy focusing on modifying the national economy and creating efficiencies in Cuban state-run entities, and on more equitably distributing benefits to the population. More specifically, the process aims at solving two longstanding anomalies:
1. Cuban state entities have historically accounted for 1 CUP as being equal to 1 USD, while the retail exchange rate more closely approximates CUP/USD 24.
2. The Cuban population have long enjoyed significant subsidies for basic goods and services, but at the same time have endured lower comparative salary levels.
It is because of this that the majority of the enacted legislation is focused on addressing these issues.
“THE CURRENCY OF REFERENCE FOR ALL TRANSACTIONS EXECUTED WITHIN THE NATIONAL TERRITORY WILL BE CUBAN PESOS”
This is not to suggest that these changes will not have a significant effect on existing as well as new and future foreign investments in Cuba. Below are the key areas that will have a direct impact on foreign investment, with changes in accounting, pricing, salaries and banking arrangements. There will also be indirect impacts as consumers, suppliers and Cuban competitors for foreign investment entities adjust to the new operating environment.
General Decree–Law 17 as the framework legislation applies equally to foreign investment vehicles as it does to other legal and natural people. Specifically, this means that the currency of reference for all transactions executed within the national territory will be Cuban Pesos both in terms of denominating prices as well as executing transactions, except for the expressly authorized cases (e.g. Mariel)(1)
(1) CENTRAL BANK OF CUBA, RESOLUTION 177/2020 4 Monetary restructuring A foreign investment perspective
Bank accounts Bank accounts for foreign investment vehicles are governed by resolutions 177, 180 and 181 of the Central Bank of Cuba. They establish that joint ventures (JV), international economic associations (IEA), Cuban- and foreign- owned and Mariel-based companies as well as embassies, foreign press agencies and foreign airlines will be able to operate bank accounts in Cuban pesos and foreign currencies. Foreign entities without a formal presence in Cuba will be allowed to operate bank accounts in foreign currencies and will also be able to execute transactions in Cuban pesos at the exchange rate prevailing at the time of the transaction.
Existing bank accounts in foreign currency held by JVs, IEAs and foreign companies will continue to be operational until the balance has been used up, accepting only debits. These entities will be required to open new bank accounts in foreign currency where the foreign investor’s monetary contributions and foreign financing will be credited. Income from exports will be converted to Cuban pesos at the prevailing exchange rate and then credited to the account in Cuban pesos.
Bank accounts denominated in CUC owned by JVs, IEAs and foreign owned Cuban companies shall be converted at a rate of 1:1 CUP/CUC. All CUC amounts maintained in bank accounts by foreign legal persons (airlines, travel agencies, embassies, representative offices) will automatically be converted to CUP by the bank at the rate of CUP/CUC 24.
The users and concessionaires of the Mariel Special Development Zone will continue to carry out their monetary operations in foreign currency operating, to that effect, bank accounts in such currency. In addition, they may open bank accounts in Cuban pesos, which will be funded via bank transfers from their foreign currency account at the prevailing exchange rate. The account in Cuban pesos will be limited only to the activities of users and concessionaires with the rest of the internal economy.
Checks denominated in CUC will continue to be accepted by banks if submitted within their validity period and shall be paid in cash at the established rate. Equally, bills of exchange shall be paid at maturity in Cuban pesos. Automatic teller machines are already dispensing only Cuban pesos, regardless of the currency of the account. This also applies to operations with international debit and credit cards accepted in Cuba.
Financing Financial institutions within Cuba shall renegotiate with borrowers any existing financing agreements denominated in CUC and redenominate the outstanding debt in CUP. However, the legislation explicitly notes that any change resulting from the currency unification will have no effect on the guarantees provided by Cuban financial institutions in favor of foreign financial institutions, nor will it have a negative impact on the availability of funds in foreign currencies needed to meet the obligations assumed by Cuban financial institutions with their foreign counterparts.
It is important to note that resolution 177/2020 establishes that collateral, escrow and collection accounts that are backing foreign obligations shall be converted at 1:1 CUC/CUP. In the case that this creates a shortfall between the value of collateral and the guarantee provided by a Cuban Bank, this amount is financed through the mechanism established in resolution 179/2020.
5 Monetary restructuring A foreign investment perspective
Labor The labor regime for the foreign investment sector of the economy is provided for by Resolution 33/2020 of the Ministry of Labor and Social Security. This resolution stipulates that the structure of labor for foreign investment is maintained, that is, employees are employed by an empleadora (employment agency) and that JVs and IEAs then contract their workforce requirements through an employment agency.
There are, however, significant changes in the way in which the price of the contract between a company and an employment agency is calculated. Resolution 33 sets out that the amount paid by the company to the employment agency consists of: 1. the value of the worker’s salary; and 2. the operating expenses incurred into by the employment agency.
This change implies that the full salary amount that is paid to the employment agency is passed through to the employee, effectively abolishing the previous CUP/USD 2 salary rule (CUP/USD 10 in Mariel) for foreign investment vehicles. Clients of empleadoras will still pay a negotiated margin to the employment agency which was previously capped at 20%.
This change should allow significant increases in salaries for Cubans working at JVs and IEAs, which will only be partially offset by reductions in allowances and incentive payments which are intended to be reduced with the higher base salaries. The legislation specifically provides that employment contract amounts be mutually agreed, potentially providing JVs and IAEs with the possibility to adjust salary rates and give workers significantly higher wages while reducing the company’s overall labor costs.
Similar provisions apply to the Mariel Special Development Zone, allowing workers to receive the full salary amount paid to the employment agency. These provisions are contained in Resolution 42/2020 of the Ministry of Labor and Social Security. This resolution also emphasizes that “the amounts payable for the supply of workforce shall be agreed between the designated Cuban entity and the foreign concessionaire or user of the Mariel Special Development Zone.”
Incentives, the distribution of dividends and performance payments are addressed in Resolution 71/2020 of the Ministry of Labor and Social Security. This provision is primarily aimed at Cuban state entities, but it also applies to workers who receive performance payments related to construction investments in tourism development programs and the Mariel Special Development Zone.
Finally, it is important to mention Resolution 29/2020 of the Ministry of Labor and Social Security. While this does not specifically apply to foreign investment vehicles, it is the framework resolution for the new salary scale in Cuban companies. Specifically, this Resolution:
► Establishes the country's minimum wage at 2,100 pesos per month.
► Approves a general salary scale for all workers within Cuban state companies based on classification levels.
► Establishes permissible benefits above base salary levels in certain specific cases.
Its key importance for foreign investment is that it sets minimum salary levels that are also applicable to JVs and IEAs.
6 Monetary restructuring A foreign investment perspective
Taxation Taxation changes are addressed in Decree-Law 21, which amends Law 113 “The Taxation System.”
The primary change for foreign investment vehicles is that taxes previously denominated and paid in CUC will now be denominated and paid in CUP. There are no other substantive changes regarding taxation for foreign investment.
It is, however, worth mentioning Resolution 222/2020 issued by the Ministry of Finance and Prices in September of 2020. While this new resolution is not directly associated with the monetary unification, it does form part of the overall economic reform process. This resolution provides income tax reductions for entities that increase their levels of exports in comparison to the previous year. Pricing Resolution 327/2020 of the Ministry of Finance and Prices establishes that foreign investment entities that are governed by Law 118, determine the new wholesale prices of their productions and services in Cuban pesos, by agreement with their clients, considering the following:
1. The general principles established for the formation of wholesale prices.
2. That these prices in Cuban pesos, they are not subject to the average indices for economic activity types.
3. That with the new wholesale prices the entities may maintain the agreed levels of profit margin.
For the users and concessionaires established under Decree-Law 313, “The Mariel Special Development Zone,” initially, the treatment of prices in freely convertible currency will remain in force.
7 Monetary restructuring A foreign investment perspective
Liquidity Legislation related to liquidity is not directly related to the currency unification, but forms an integral part of overall economic reforms. Resolution 115/2020 of the Ministry of Finance and Prices was issued in August 2020 and amended by Resolution 153, on the 29th of December 2020 and reissued on January 8, 2021. The key changes to this law include the following:
► Payments in the internal market should be made in CUP, regardless of what transfers of liquidity the payments require.
► The application of the legislation has been extended to International Economic Association Contracts in addition to solely joint ventures.
► Sales to embassies, branches, and foreign representations are made without liquidity.
► JVs and IEAs that make sales to the internal economy should receive a percentage of those sales in liquid funds as agreed between the parties but not exceeding 60%.
► JVs and IEAs, when paying national suppliers, should make payments with a percentage of the value of the invoice in liquid funds, this percentage should be at a rate agreed between the parties but not exceeding 60%. This does not apply in the case of goods and services that are not substitutes for imports, such as basic services.
► The following payments may be made without liquidity: salaries, dividends for the Cuban shareholder, tariffs, taxes, contributions and other payments contained in the approved regulations.
► The authorized purchase of fuel should be made with liquidity.
► Embassies, branches, and foreign representations will make payments to national suppliers without liquidity.
It should be noted that the provisions of this resolution are intended to be implemented gradually. Specifically, the implementation of the provisions of this resolution requires the prior authorization of the Ministry of Economy in each case.
8 Monetary restructuring A foreign investment perspective
Accounting Accounting treatments related to the transition and the monetary restructuring are regulated by Resolution 337/2020 of the Ministry of Finance and Prices, as well as by two new Cuban accounting standards, specifically NEC 8 “Proceso de unificación monetaria y cambiaria” (Monetary restructuring and exchange rate unification) and NCC 6 “Operaciones con Moneda Extranjera [o Pesos Convertibles]” (Transactions with Foreign Currency [or Convertible Pesos]). Taken together, these three documents present the following implications for foreign investment vehicles in Cuba:
► Use of the Cuban peso as the presentation currency for the financial statements and for recording transactions;
► The peso is valued at its nominal value and the foreign currency at the exchange rate in force and as established by the relevant accounting standard;
► The users and concessionaires based in the Mariel Special Development Zone use the foreign currency with which they operate as their functional, accounting and presentation currency;
► The economic players make their invoices, collections and payments in CUP from their accounts in that currency, for transactions related to the internal economy;
► The balance of accounts linked to foreign trade transactions is multiplied by the current exchange rate;
► Cash on hand in convertible pesos is translated to Cuban pesos at a 1:1 exchange rate;
► Debts payable in convertible pesos to non-state forms of management are converted to Cuban pesos at the current exchange rate;
► Bank account balances in freely convertible currency are recorded at their Cuban peso equivalent at the current exchange rate;
► Share capital, as well as retained earnings pending distribution and dividends and participations payable, provisioned in current bank accounts in foreign currency, are recorded at the exchange rate in force;
► The exchange rate difference generated by the conversion of transactions into Cuban pesos is recorded as
► Deferred Financial Expenses account for debts with non-State forms of management;
► Purchase of Currency for exchange rate variations on matured foreign transactions;
► Remaining differences go to the Unrealized Gains/Losses account.
It is important to note that some grey areas remain to clarified as at the date of issuance of this note, NEC 6 & 8 are silent as to what exchange rate foreign investment vehicles should use to transfer fixed assets and inventory from CUC to CUP. Notwithstanding this, it has been provided provisional instructions that JVs should follow the same approach as state entities which NEC 8 sets out as 1:1 between the CUP and CUC.
9 Index of legislation
10 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
68 Decree-Law Council of State Provisions related to the implementation of the Cuban and foreign legal Monetary 17/2020 monetary restructuring process and the currency and natural persons restructuring and exchange rate unification, the beginning of framework the price correction process, the gradual elimination of excessive subsidies and unnecessary free goods and services, and a comprehensive reform of salaries, pensions and social assistance benefits. 68 Decree-Law Council of State Transitional procedure for calculating pensions Cuban natural persons Social benefits 18/2020 and social security benefits.
68 Decree-Law Council of State Procedure for calculating age, total disability and Cuban self-employed and Social benefits 19/2020 death pensions for beneficiaries of the special workers of cooperatives social security regimes in the private sector.
68 Decree-Law Council of State On the transitional procedure for calculating Cuban workers of the Social benefits 20/2020 maternity benefits for workers in the state sector. state sector of the economy
68 Decree-Law Council of State Amendment to Law 113 "on the Tax System" Cuban and foreign legal Taxation - Personal 21/2020 dated July 23, 2012, denominating in Cuban and natural persons pesos all the amounts previously expressed in convertible pesos.
68 Decree-Law Council of State Customs duties for non-commercial imports into Cuban and foreign legal Customs duties 22/2020 the Republic of Cuba. and natural persons
68 Decree-Law Council of State Amendment to Decree-Law 357 "on Personal Cuban self-employed Sanctions 23/2020 Violations in the Exercise of Self-Employment," workers denominating in Cuban pesos all the amounts previously expressed in convertible pesos.
68 Decree-Law Council of State Amendment to Law 130 of the State Budget for Cuban and foreign legal Government 24/2020 2020, of December 20, 2019, increasing the and natural persons budget deficit amount and the public debt. It provides for the payment of personal income taxes by Cuban workers in the state sector and includes the issuance of sovereign bonds to partially finance the deficit increase.
68 Decree 24/2020 Council of State It refers to the powers of approval with regards to Cuban natural and legal Price setting - prices and tariffs. It contains a list of prices and persons Specific tariffs approved by the Council of Ministers and refers to the prices and tariffs approved by the Ministry of Finance and Prices, the Ministry of Communications and ETECSA.
68 Decree 25/2020 Council of State Amendment to Decree 283 "Regulations Cuban natural persons Social benefits pertaining to the Social Security Law", of April 6, 2009.
68 Decree 26/2020 Council of State Amendment to Decree 308 "Regulations of Tax Cuban and foreign legal Taxation - General Rules and Procedures," dated October and natural persons Corporation 31, 2012, eliminating all references to CUCs. 68 Agreement Council of State It contains a list of prices for food, gasoline, LPG Cuban and foreign legal Price setting - 8957/2020 and other products, approved by the Council of and natural persons Specific Ministers.
68 Agreement Council of State It contains a list of prices for various brands of Cuban companies, Price setting - 8958/2020 raw tobacco and wholesale prices for various including joint venture Specific agricultural products, approved by the Council of companies exporting Ministers. cigars
68 Agreement Council of State It contains a list of prices for the supply of water Cuban and foreign Price setting - 8959/2020 and related services to the population. natural persons Specific
11 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
69 Resolution Ministry of Labor It establishes the minimum age and total disability Cuban and foreign legal Social benefits 28/2020 of the and Social pension amount applicable to the General Social and natural persons Ministry of Labor Security Security Regime and the special regimes of the and Social Revolutionary Armed Forces and Interior Security ministries. It sets out the amounts for the pensions granted by the General Social Security System.
69 Resolution Ministry of Labor It fixes the country's minimum wage at 2100 Cuban workers of the Salary provisions - 29/2020 of the and Social pesos per month and approves the wage scale state sector General Ministry of Labor Security and rates applicable to all workers. and Social Security
69 Resolution Ministry of Labor It sets out a salary system for workers who hold Cuban workers of the Salary provisions - 30/2020 of the and Social positions as cadres, technicians, operators, state sector Specific Ministry of Labor Security administrators and service workers in the local and Social bodies of the People's Power and their assigned Security and subordinate budget units.
69 Resolution Ministry of Labor It sets out a salary system for workers of all Cuban workers of the Salary provisions - 31/2020 of the and Social occupational categories working in branch state sector of the Specific Ministry of Labor Security schools and training centers attached to state economy and Social bodies, agencies of the Central State Security Administration and national entities, and to Higher Business Management Bodies.
69 Resolution Ministry of Labor It classifies technical positions in the National Cuban workers of the Salary provisions - 32/2020 of the and Social Audit System into groups based on their state sector of the Specific Ministry of Labor Security complexity. economy and Social Security
69 Resolution Ministry of Labor It establishes specificities applicable to foreign Foreign investment Salary provisions - 33/2020 of the and Social investment vhicles in terms of labor. Among the vehicles and Cuban General Ministry of Labor Security most important ones is the possibility of workers of same and Social negotiating salary amounts with the employment Security agency without any limitations and periodically adjusting them based on performance, considering the complexity, working conditions and additional requirements of each position. It should be noted that the agreed salary levels will not be inferior to those corresponding to each position under the current salary scale.
69 Resolution Ministry of Labor It establishes a salary scheme for workers Cuban natural and legal Salary provisions - 34/2020 of the and Social occupying journalist positions in press and other persons of the media Specific Ministry of Labor Security written-media organizations. and Social Security
69 Resolution Ministry of Labor It establishes a salary scheme for the general and Education sector Salary provisions - 35/2020 of the and Social secondary education system, which applies to Specific Ministry of Labor Security workers of educational establishments or and Social institutions legally recognized as such. Security
69 Resolution Ministry of Labor It establishes a salary scheme for the higher Higher education sector Salary provisions - 36/2020 of the and Social education system applicable to all employees of Specific Ministry of Labor Security any occupational category working at any of and Social these centers. Security
69 Resolution Ministry of Labor It establishes a salary scheme for employees of Healthcare sector Salary provisions - 37/2020 of the and Social healthcare facilities that belong to the National Specific Ministry of Labor Security Healthcare System. and Social Security
12 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
69 Resolution Ministry of Labor It establishes the payment of a basic monthly Sport sector Salary provisions - 38/2020 of the and Social income to high-performance athletes in national Specific Ministry of Labor Security sports preselections. and Social Security
69 Resolution Ministry of Labor It establishes a salary scheme for workers in the Science, technology and Salary provisions - 39/2020 of the and Social science, technology and innovation fields. innovation sector Specific Ministry of Labor Security and Social Security
69 Resolution Ministry of Labor Amends Section II of Resolution 5 on material Cuban workers Sanctions 40/2020 of the and Social damages, issued by the Minister of Labor and Ministry of Labor Security Social Security, dated January 14, 2008. and Social Security
69 Resolution Ministry of Labor It sets out complexity groups, positions and Cuban diplomat and Salary provisions - 41/2020 of the and Social salaries that will be earned by workers who have related workers Specific Ministry of Labor Security been serving overseas during their holidays in and Social Cuba, while preparing for a mission abroad and Security during the period while they are waiting to return to their workplaces once their mission has been completed, which should not exceed two months.
69 Resolution Ministry of Labor It establishes that the amounts payable for the Mariel companies Salary provisions - 42/2020 of the and Social supply of workforce are agreed between the General Ministry of Labor Security designated Cuban entity and the foreign and Social concessionaire or user of the Special Security Development Zone Mariel.
69 Resolution Ministry of Labor It sets out monthly salaries for subsidized artists Artists and musicians Salary provisions - 43/2020 of the and Social in the fields of music, performance, theater, Specific Ministry of Labor Security dance, circus, cinema and animation, who have a and Social work relationship with culture, radio and Security television, tourism, public healthcare and other authorized entities.
69 Resolution Ministry of Labor It establishes monthly salaries for cadres of Cultural institutions Salary provisions - 44/2020 of the and Social cultural institutions categorized by the Ministry of Specific Ministry of Labor Security Culture and of cultural centers attached to the and Social Office of the Historian of Havana. Security
69 Resolution Ministry of Labor It sets out a salary scheme for crew members on Maritime sector Salary provisions - 45/2020 of the and Social ships and vessels operating international routes, Specific Ministry of Labor Security engaging in cabotage activities or carrying out and Social their activities in coastal and inland waters, Security owned or operated by companies, budget units or any other entity of the Central State Administration and local bodies of the People's Power.
69 Resolution Ministry of Labor It sets out a payment for the proceedings involved Branch offices and other Price setting - 46/2020 of the and Social in granting, renewing, updating and issuing foreign companies and Specific Ministry of Labor Security duplicates and certicates of work permits granted foreign natural persons and Social to expatriates and persons without citizenship but Security holding temporary residence permits, to carry out professional or work activities in the country.
13 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
69 Resolution Ministry of Labor It sets out that workers' income consists of a fixed Cuban companies and Salary provisions - 71/2020 of the and Social component in line with a salary scale that is based Cuban workers General Ministry of Labor Security on job complexity plus any additional payments and Social approved, and a variable component which Security depends on results (piece-rate payment systems + distribution of profits + performance-based payment system applied to construction investments in tourism development programs and the Mariel Special Development Zone).
70 Resolution Ministry of It sets out the payment of the Personal Income Cuban companies Price setting - 310/2020 of the Finance and Tax for workers in the corporate and budget Specific Ministry of Finance Prices sectors, and a tax rate of five percent (5%) on the and Prices total income obtained, according to the payroll records, for the purposes of calculating the Special Contribution to Social Security. The Special Contribution to Social Security will be paid through a system of deductions that will be made by entities at the time of each remuneration, within the first ten working days of each month.
70 Resolution Ministry of It centralizes in the Ministry of Finance and Prices Cuban companies Price setting - 311/2020 of the Finance and the approval of maximum wholesale prices and Specific Ministry of Finance Prices tariffs for the domestic sale of certain goods and and Prices services.
70 Resolution Ministry of It sets out maximum collection and purchase Cuban agricultural Price setting - 312/2020 of the Finance and prices for agricultural products. entities and farmers Specific Ministry of Finance Prices and Prices
70 Resolution Ministry of It sets out the maximum commercial margin for a Cuban companies Price setting - 313/2020 of the Finance and number of state-owned companies. General Ministry of Finance Prices and Prices
70 Resolution 314 Ministry of It sets out the maximum rates in Cuban pesos for Natural and legal persons Price setting - /2020 of the Finance and technical and productive services that may be Specific Ministry of Finance Prices charged to legal and natural persons for the and Prices services provided by the General Customs House of the Republic of Cuba.
70 Resolution Ministry of It sets out the maximum rates per kilometer and Cuban companies Price setting - 315/2020 of the Finance and passenger kilometer in Cuban pesos for the the (transportation Specific Ministry of Finance Prices provision of bus, minibus and microbus rental companies and related and Prices services that entities are allowed to charge for entities) passenger transportation services.
70 Resolution Ministry of It empowers a number of business groups to Cuban companies Price setting - 316/2020 of the Finance and establish the general provisions and cargo type (transportation Specific Ministry of Finance Prices classifications on which the maximum cargo rates companies) and Prices for different means of transport are based.
70 Resolution Ministry of It sets out the maximum rates in Cuban pesos Cuban companies Price setting - 317/2020 of the Finance and (CUP) for multimodal transportation services. (transportation Specific Ministry of Finance Prices companies) and Prices
70 Resolution Ministry of It approves the rates in Cuban pesos for the Cuban companies Price setting - 318/2020 of the Finance and services provided by the Central Business Specific Ministry of Finance Prices Registry, attached to the Ministry of Domestic and Prices Trade.
70 Resolution Ministry of It establishes the maximum rates in Cuban pesos Cuban and foreign legal Price setting - 319/2020 of the Finance and for motor vehicle technical inspection services to and natural persons Specific Ministry of Finance Prices be applied by the Road Administration and Motor and Prices Vehicle Diagnostics Agency (FICAV, for its acronym in Spanish).
14 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
70 Resolution Ministry of It sets out the maximum rates in Cuban pesos for Cuban companies (school Price setting - 320/2020 of the Finance and student transportation services, which are transport business Specific Ministry of Finance Prices provided by companies that belong to the School group) and Prices Transportation Business Group.
70 Resolution Ministry of It sets out the rates in Cuban pesos for technical Cuban companies Price setting - 321/2020 of the Finance and and productive services required to check the Specific Ministry of Finance Prices level of protection provided by personal and Prices protection equipment.
70 Resolution Ministry of It approves the maximum rates in Cuban pesos for Cuban companies and Price setting - 323/2020 of the Finance and water supply, removal of obstructions inside other state entities Specific Ministry of Finance Prices buildings and other technical and productive and Prices services provided by entities within the Business System assisted and sponsored by the National Institute of Hydraulic Resources.
70 Resolution Ministry of Treatment that will be applied by entities to Cuban companies Price setting - 324/2020 of the Finance and decentralized wholesale prices in Cuban pesos General Ministry of Finance Prices during the first six-month period after the and Prices enactment of the monetary restructuring process.
70 Resolution Ministry of It sets out the Construction and Assembly Pricing Cuban companies and Price setting - 325/2020 of the Finance and System for investments, capital repairs and foreign investment Specific Ministry of Finance Prices construction maintenance. vehicles and Prices
70 Resolution Ministry of It empowers the Chairman of the Motor Vehicle Cuban entities Price setting - 326/2020 of the Finance and Business Group to approve the rates in Cuban Specific Ministry of Finance Prices pesos for driving school services provided by and Prices driving and road safety schools to natural and legal persons.
70 Resolution Ministry of It establishes that upon the implementation of the Foreign investment Price setting - 327/2020 of the Finance and monetary restructuring and exchange rate vehicles Specific Ministry of Finance Prices unification process, the entities governed by Law and Prices 118 "on Foreign Investment" will establish new wholesale prices for their goods and services in Cuban pesos by agreement with their clients. Initially, the treatment of prices in freely convertible currency will be maintained in effect for users and concessionaires established under Decree-Law 313 "on the Mariel Special Development Zone."
70 Resolution Ministry of It establishes equal rates in Cuban pesos for Cuban entities and Price setting - 328/2020 of the Finance and Cuban and foreign individuals for admission fees natural persons Specific Ministry of Finance Prices to museums, historical and patriotic sites, and Prices cinemas, theaters, cultural and sports events, and other similar places.
70 Resolution Ministry of Treatment that will be applied by entities to Cuban companies Price setting - 329/2020 of the Finance and decentralized retail prices in Cuban pesos as of General Ministry of Finance Prices the implementation of the monetary restructuring and Prices process.
70 Resolution Ministry of It empowers the heads of Higher Business Cuban companies Price setting - 330/2020 of the Finance and Management Bodies and store chains to approve Specific Ministry of Finance Prices prices higher than those established by the and Prices Minister of Finance and Prices for national products, soft drinks, malt drinks and beers at specific establishments and during certain events.
71 Resolution Ministry of It repeals several resolutions issued by the Cuban companies Price setting - 331/2020 of the Finance and Minister of Finance and Prices setting out prices Specific Ministry of Finance Prices and tariffs to the population. and Prices
15 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
71 Resolution Ministry of It approves the issuance and printing of stamps of Cuban and foreign legal Price setting - 332/2020 of the Finance and various denominations, all payable in Cuban and natural persons Specific Ministry of Finance Prices pesos. and Prices
71 Resolution Ministry of It authorizes the circulation of several stamps, Cuban agricultural Price setting - 333/2020 of the Finance and payable in Cuban pesos. entities and farmers Specific Ministry of Finance Prices and Prices
71 Resolution Ministry of It establishes that the excess liquidity generated, Cuban companies Government 334/2020 of the Finance and due to the promulgation of the currency and budget Ministry of Finance Prices exchange rate unification, from the retail sale in and Prices Cuban pesos of goods and services that were previously being sold in convertible pesos will be contributed to the State Budget by the entities generating said excess liquidity.
71 Resolution Ministry of It sets out the payment of personal income taxes Cuban natural persons Taxation - Personal 335/2020 of the Finance and for Cuban and foreign natural persons who are Ministry of Finance Prices permanent residents in the national territory, and Prices hired through employment agencies or any other authorized entities. This will be executed under the provisions of Law 113 "on the Tax System", dated July 23, 2012.
71 Resolution Ministry of It amends various accounting resolutions and Cuban and foreign legal Accounting 337/2020 of the Finance and standards. persons, including Ministry of Finance Prices foreign investment and Prices vehicles
71 Resolution Ministry of It establishes that, to the greatest extent Cuban companies Social benefits 338/2020 of the Finance and possible, food and lodging arrangements will be Ministry of Finance Prices made for workers who have been sent to work and Prices outside of their usual workplace or, alternatively, a daily allowance will be provided for these purposes.
71 Resolution Ministry of It establishes regulations for controlling, Cuban companies Government 339/2020 of the Finance and registering and reporting returns of undue or budget Ministry of Finance Prices excess income as well as other income items and Prices related to the State Budget.
71 Resolution Ministry of It establishes the financial procedure for Cuban companies Social benefits 341/2020 of the Finance and compensations made for the use of private Ministry of Finance Prices vehicles in work-related activities. and Prices
71 Resolution Ministry of It establishes the operation of the bank accounts Cuban state entities Government 342/2020 of the Finance and of the Treasury System with regards to the budget Ministry of Finance Prices Central Budget and local budgets. and Prices
71 Resolution Ministry of It sets out several provisions regarding the Cuban entities Sanctions 343/2020 of the Finance and collection of fines at Fines Control and Collection Ministry of Finance Prices Offices. and Prices
71 Resolution Ministry of It approves retail prices for agricultural inputs, Cuban companies Price setting - 344/2020 of the Finance and equipment and tools for all local agricultural Specific Ministry of Finance Prices production sold by trading companies within the and Prices agricultural system.
71 Resolution Ministry of It approves retail prices and tariffs for products Cuban companies and Price setting - 345/2020 of the Finance and and services. natural persons Specific Ministry of Finance Prices and Prices
16 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
71 Resolution Ministry of It approves a national long-distance tariff scheme Natural and legal persons Price setting - 347/2020 of the Finance and consistent with the administrative division. Specific Ministry of Finance Prices and Prices
71 Resolution Ministry of It empowers the Minister of Transportation to Cuban transportation Price setting - 349/2020 of the Finance and establish rates in Cuban pesos for any excess companies and natural Specific Ministry of Finance Prices accompanying baggage travelling on buses persons and Prices providing national passenger transportation services; the baggage weight allowed at no additional cost for transportation on domestic flights; and the charge for excess baggage on domestic flights, as well as the procedures required to ensure the operation and compliance with the approved rates.
71 Resolution Ministry of Establishes retail prices of gasoline for state- Cuban state-owned Price setting - 350/2020 of the Finance and owned companies and foreign investment companies and foreign Specific Ministry of Finance Prices vehicles, including Mariel companies. investment vehicles and Prices
71 Resolution Ministry of It sets out rates in Cuban pesos for services Cuban entities Price setting - 351/2020 of the Finance and provided by certified and non-certified senior Specific Ministry of Finance Prices centers and nursing homes. and Prices
71 Resolution Ministry of Provisions regarding the payment of customs Natural persons Price setting - 352/2020 of the Finance and duties for passengers importing goods for non- Specific Ministry of Finance Prices commercial purposes. and Prices
71 Resolution Ministry of It establishes customs duties for natural persons Natural persons Price setting - 353/2020 of the Finance and receiving air, sea, postal or courier shipments in Specific Ministry of Finance Prices the national territory for non-commercial and Prices purposes.
71 Joint Resolution Ministry of It repeals several joint resolutions issued by the Cuban companies Other 1/2020 of the Finance and ministers of Finance and Prices and of Economy Ministry of Finance Prices and and Planning. and Prices and the Ministry of Ministry of Economy and Economy and Planning Planning
71 Joint Resolution Ministry of It repeals several joint resolutions issued by the Cuban companies Other 2/2020 of the Finance and ministers of Finance and Prices and of Economy Ministry of Finance Prices and and Planning. and Prices and the Ministry of Ministry of Economy and Economy and Planning Planning
72 Joint Resolution Ministry of It sets out customs tariffs for goods in accordance Cuban and foreign Other 5/2020 of the Finance and with the nomenclature of the Harmonized companies Ministry of Finance Prices and Commodity Description and Coding System, and Prices and the Ministry of established by Resolution 67 of the Director of Ministry of Foreign Foreign Trade the National Statistics and Information Office, Trade and Foreign and Foreign dated April 25, 2016. It repeals Joint Resolution Investment Investment 1, of June 12, 2017, issued by the ministers of Finance and Prices and of Foreign Trade and Foreign Investment.
73 Resolution Central Bank of It covers the denominations of transactions Cuban and foreign Banking 177/2020 of the Cuba carried out in the national territory, bank natural and legal Central Bank of accounts and the exchange rate of the Cuban persons. Cuba peso against foreign currencies.
17 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
73 Resolution Central Bank of It establishes a facility in Cuban pesos, of a Cuban companies Banking 178/2020 of the Cuba provisional nature, intended to finance a number Central Bank of of different recognized categories, such as Cuba working capital, investments and salaries, with a short-term maturity until its conversion into its corresponding financing, with the purpose of mitigating the effect caused by the devaluation of the Cuban peso. This will be understood as a bridge loan.
73 Resolution Central Bank of It establishes a financing mechanism in Cuban Cuban companies Banking 179/2020 of the Cuba pesos to cover the difference between the Central Bank of financial resources required by business entities Cuba to honor any external obligations entered into prior to the currency and exchange rate unification, and the resources available to them, applying the exchange rate in effect, so that in accordance with the Plan for the Economy, payment of these obligations with a maturity of up to three hundred and sixty (360) days following the unification is ensured.
73 Resolution Central Bank of Bank accounts opened in the national territory in Cuban and foreign Banking 180/2020 of the Cuba foreign currency by Cuban and foreign natural natural and legal persons Central Bank of persons may remain in their current denomination Cuba or be converted to Cuban pesos at the decision of their holders at the prevailing exchange rate. The term foreign currency refers to freely convertible currencies recognized by the Central Bank of Cuba.
73 Resolution Central Bank of As of the currency and exchange unification, joint Foreign investment Banking 181/2020 of the Cuba ventures, international economic association vehicles Central Bank of contracts, and wholly-owned foreign companies Cuba established in Cuba under Law 118 "Foreign Investment Law," dated March 29, 2014, will be able to operate bank accounts in Cuban pesos and foreign currencies. The term foreign currency refers to the currencies accepted by the Central Bank of Cuba.
73 Resolution Central Bank of It establishes the receipt of deposits of goods Cuban and foreign Banking 182/2020 of the Cuba managed by the depository institutions Banco de natural and legal Central Bank of Crédito y Comercio, Banco Metropolitano S.A. and persons. Cuba Banco Popular de Ahorro.
73 Resolution Central Bank of Resolution 280/2019 of the BCC was repealed by Cuban and foreign Banking 183/2020 of the Cuba Resolution 183/2020 of the BCC, which has natural and legal persons Central Bank of amended the aspects related to collections and Cuba payments as a result of the currency unification. Limits to payments in cash are eliminated (they are left to the discretion of the parties) as well as payments in CUC. In addition, the possibility of using other payment instruments is introduced.
74 Resolution Ministry of It establishes that entities performing business Cuban companies Administration/Co 135/2020 of the Domestic Trade activities in convertible pesos (CUC) governed by ntrol Ministry of the Ministry of Domestic Trade, shall be Domestic Trade registered in the National Currency Section (CUP) of the Central Business Registry.
74 Resolution Ministry of It approves guidelines for the sale of goods Cuban entities and Cuban Administration/Co 136/2020 of the Domestic Trade included in the regulated family basket, medical natural person ntrol Ministry of diets and other prioritized programs managed by Domestic Trade the Ministry of Domestic Trade, and for the work performed by Consumer Registry Offices.
18 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
74 Resolution Ministry of It approves tariffs and prices for the provision of Cuban entities and Cuban Price setting - 137/2020 of the Domestic Trade services and sale of parts to the public under the natural person Specific Ministry of Energy Saving Program. Domestic Trade
74 Resolution Ministry of It approves the official list of retail rates and Cuban entities and Cuban Price setting - 138/2020 of the Domestic Trade prices for a selection of services, such as natural person Specific Ministry of barbering and hairdressing, atelier, laundry, Domestic Trade drying and ironing of clothes, and repair and adjustment of orthopedic shoes.
74 Resolution Ministry of It sets out retail prices in Cuban pesos (CUP) for Cuban entities and Cuban Price setting - 139/2020 of the Domestic Trade various industrial products. natural person Specific Ministry of Domestic Trade
74 Resolution Ministry of It approves retail prices in Cuban pesos (CUP) for Cuban entities and Cuban Price setting - 140/2020 of the Domestic Trade a number of products sold in the retail network. natural person Specific Ministry of Domestic Trade
74 Resolution Ministry of During the Monetary Restructuring Process, there Various Cuban entities Price setting - 141/2020 of the Domestic Trade will be an increase in prices in both the rationed General Ministry of and the free markets. The increase in wholesale Domestic Trade prices, on the other hand, will gradually be passed on to retail entities generating commercial margins higher than those approved by authorities. This resolution governs the procedure for calculating and recording the differences generated in commercial margins and stipulates the destination of these amounts.
74 Resolution Ministry of Regulations governing the operation of units Cuban entities and Social benefits 142/2020 of the Domestic Trade within the Family Care System. natural persons Ministry of Domestic Trade
74 Resolution Ministry of Regulations governing school meals in basic Various Cuban entities Social benefits 143/2020 of the Domestic Trade secondary education. Ministry of Domestic Trade
74 Resolution Ministry of Specific indications for workers' canteens and Various Cuban entities Social benefits 144/2020 of the Domestic Trade other food services within the People's Food Ministry of Network. Domestic Trade
74 Resolution Ministry of It sets out the maximum commercial margin rates Various Cuban entities Price setting - 145/2020 of the Domestic Trade in Cuban pesos applicable by the national and Specific Ministry of provincial business companies under the Group of Domestic Trade Food Products and Other Consumer Goods Wholesale Companies and the Industrial Products and Services Commercialization Group.
75 Resolution General Customs It approves the Value/Weight Alternative to Cuban and foreign Price setting - 307/2020 of the House of the determine the customs value (ad valorem) of natural persons Specific General Customs Republic items classified as miscellaneous, imported for House non-commercial purposes by natural persons via air, sea, postal or courier shipments.
75 Resolution Ministry of It sets out maximum rates for services provided Cuban and foreign legal Price setting - 125/2020 of the Communications by Empresa de Telecomunicaciones de Cuba, S.A. and natural persons Specific Ministry of Communications
19 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
75 Resolution Ministry of It approves the rates applicable to national and Cuban and foreign legal Price setting - 126/2020 of the Communications foreign natural persons as well as legal persons and natural persons Specific Ministry of for international telecommunication services. Communications
75 Resolution Ministry of It establishes the maximum rates in Cuban pesos Cuban entities and Price setting - 127/2020 of the Communications applicable to bodies, agencies, companies, foreign investment Specific Ministry of cooperatives, organizations, foundations, vehicles Communications associations, institutions, branches, embassies and international organizations for installation fees, monthly fees and major movements relating to telephone services.
75 Resolution Ministry of It establishes the maximum rates in Cuban pesos Cuban and foreign legal Price setting - 128/2020 of the Communications for land mobile cellular services provided to and natural persons Specific Ministry of natural persons, bodies, agencies, state-owned Communications and joint venture companies, wholly-owned foreign companies, cooperatives, political and mass organizations, foundations, associations, non-governmental organizations, religious institutions and autonomous bodies, branches, embassies and international organizations.
75 Resolution Ministry of It regulates licensing proceedings for radio State communications Price setting - 129/2020 of the Communications stations. companies Specific Ministry of Communications
75 Resolution Ministry of It amends Resolution 98 of the Minister of Natural and legal persons Sanctions 130/2020 of the Communications Communications, dated April 17, 1995, on the Ministry of services of distribution of television programs Communications (unauthorized distribution of television programs, unauthorized installation of satellite or other equipment intended to receive or distribute television signals). In particular, this resolution sets out fines in CUPs for the activities described herein.
75 Resolution Ministry of It amends paragraph 5 of the annex to Resolution Legal and natural Administration/Co 131/2020 of the Communications 100 of the Minister of Information Technology persons ntrol Ministry of and Communications, which establishes the use of Communications the 450-470 MHz frequency band for land mobile services and approves the methodology for granting permits for using the radioelectric spectrum.
75 Resolution Ministry of It amends Resolution 73/2002 on the assignment Cuban maritime Administration/Co 132/2020 of the Communications and formation of ship station identities within the companies ntrol Ministry of maritime mobile service; Resolution 16/2005 Communications containing the Regulations for Radiocommunication Services for the commercial band; Resolution 17/2005 containing the Regulations for Radiocommunication Equipment Manufacturing; and Resolution 96/2009 containing provisions for using the 3.4-3.6 GHz frequency band (all of them issued by the Minister of Information Technology and Communications).
75 Resolution Ministry of It approves the maximum rates in Cuban pesos for Cuban natural and legal Price setting - 133/2020 of the Communications the services provided by budget units of the persons Specific Ministry of Computer and Electronics Youth Club to natural Communications and legal persons.
20 New legislation Main legislative reforms
Gazzette№ Type of document Issuing body Content Who it affects Category
75 Resolution Ministry of It establishes the basis used to calculate the Cuban companies and Price setting - 266/2020 of the Construction prices of construction and assembly services foreign investment Specific Ministry of provided to investments; and of constructive vehicles Construction maintenance and cost bases of materials, labor and equipment used in the provision of construction and assembly services for investment and constructive maintenance purposes, all of which are used to prepare construction and assembly budgets.
75 Resolution Ministry of It repeals various resolutions of the Ministry of Cuban companies and Price setting - 299/2020 of the Public Health Public Health on the prices of drugs, medical natural persons Specific Ministry of Public devices and consumables. Health
75 Resolution Ministry of It sets out new retail prices to the population for Cuban natural persons Price setting - 300/2020 of the Public Health dispensary products, royal jelly honey and dental Specific Ministry of Public prostheses. Health
76 Resolution Ministry of It approves maximum retail prices in Cuban pesos Cuban companies and Price setting - 348/2020 of the Finance and for agricultural products intended for rationed natural persons Specific Ministry of Finance Prices sales to holders of medical diets in state-run and Prices establishments and regulates maximum retail prices for agricultural products intended for free sale to the population in said establishments.
76 Resolution Ministry of It approves the "Procedure for the distribution of Cuban state-owned Salary provisions - 375/2020 of the Finance and profits to workers by means of a quarterly companies and workers General Ministry of Finance Prices advance payment against profits generated". and Prices
21 Building a better working world for Managing Partner companies in Cuba Matthew Pickles Contact for Advisory, Tax & Regulatory matters
EY is a global leader in assurance, tax, Contact details transaction and advisory services. The Cell: (+53) 5 268-9547 insights and quality services we deliver help build trust and confidence in the capital email: [email protected] markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all our Audit Partner stakeholders. In so doing, we play a critical role in building a better working world for our Germán Matzkin people, for our clients and for our Contact for Audit services communities. Contact details Cell: (+53) 5 263 8115 EY has over 20 years of experience assisting clients in Cuba across multiple service lines, email: [email protected] including audit, advisory, tax, transaction support and other areas. We perform work in Audit Partner accordance with both local regulatory requirements and international best Alejandro Gago practices. Contact for Audit services Contact details Cell: (+53) 5 284 7300 email: [email protected]
About the authors
Luke Ingles Claudia Udaquiola Rafael Conde Partner Manager of Transaction Senior Consultant of Transactions Advisory Advisory Services at EY Cuba Transaction Advisory Services Services at EY Cuba at EY Cuba Contact details Contact details Contact details [email protected] [email protected] [email protected]
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