Cuba undergoes a far-reaching transformation of its economic system. Notes for international busines

On 18 June, the Cuban government and parliament approved a set of measures to tackle the deep crisis in which the country has been mired in recent years, exacerbated by the energy blockade imposed by the US administration in early January. The measures, set out in a report containing 176 proposals and organised into 23 key areas, entail fundamental transformations to Cuba’s economic and social system.

The package described has a structural scpe. It is not limited to administrative adjustments but aims at a broad reconfiguration of the Cuban economic model: greater business autonomy, expansion of non-state management models, opening up opportunities for private and foreign capital, greater flexibility in prices and wages, transformation of the foreign exchange market, banking and tax reform, and changes in strategic sectors such as energy, tourism, trade, agriculture, transport and digital infrastructure. The report itself frames these transformations within the concept of broadening the participation of all economic actors, boosting foreign investment and using market mechanisms to allocate resources, whilst retaining socialist planning.

The effective implementation of these measures will require far-reaching legislative and regulatory changes across multiple frameworks: foreign investment, state-owned companies, commercial companies, micro, small and medium-sized enterprises (MSMEs) and non-state management models, property and real rights, employment contracts, the foreign exchange regime, banking and payments, taxation, pricing, insolvency, imports/exports, tourism, energy, internal trade and public procurement. This note should therefore be read as a preliminary assessment of opportunities and risks, subject to the approval and publication of the implementing regulations.

Key message for foreign investors

The main political signal is a significant opening up of the economic sphere available to foreign and private capital, albeit within a framework in which the State retains control of strategic sectors and the fundamental means of production. For foreign entrepreneurs, the key change is not only the possibility of new projects, but also the potential emergence of new partners, new corporate structures, new assets suitable for investment, and new channels for financing and collection.

Among the measures with the greatest impact are:

• The possibility of foreign investment in private companies;
• The purchase of shares in state-owned companies by foreign individuals and legal entities;
• The sale of state assets;
• The conversion of state-owned companies into commercial companies;
• The removal of the mandatory use of state-owned entities as employers in certain projects;
• The opening of overseas accounts by foreign investors and for various investment schemes without prior authorisation;
• Direct access to the foreign exchange market;
• Reduction of red tape through the ‘presumption of approval’ mechanism;
• Direct import and export by private companies and cooperatives; and
• Authorisation for foreign entities to engage in wholesale and retail trade without restrictions.

Foreign investment: liberalisation, new structures and reduction of barriers

The section on foreign investment is probably the one of greatest direct relevance to international companies. The document announces a move towards forms of investment that were up to now prohibited or heavily restricted: foreign investment in private companies; the expansion of economic partnership agreements; greater decentralisation of approval processes; a reduction in red tape and processing times; the principle of tacit administrative approval; the possibility of investment in specific areas such as Old Havana; and greater flexibility in dealing with foreign currency.

For foreign investors, the most significant development would be the possibility of investing in Cuban private companies. This could transform the market for entry into Cuba: rather than being limited to joint ventures, partnerships with state-owned entities or management contracts, investors could structure joint ventures, equity stakes, convertible financing, strategic supply agreements, franchises, brand licences or investment in private Cuban platforms. However, for this to become operational, it will be essential to reform the foreign investment framework and coordinate it with the regulations governing MSMEs, private enterprises, commercial companies, foreign exchange controls, taxation, and sector-specific authorisations.

Also relevant is the extension of property rights: surface rights for up to 99 years and usufruct rights for up to 50 years. These timeframes, if incorporated into clear and enforceable regulations, can improve the bankability of property, tourism, energy, agro-industrial or logistics projects by providing time horizons more compatible with capital-intensive investments.

The proposal to remove the mandatory use of entities and allow direct hiring could have a very significant impact. In practice, state-run labour intermediation has been one of the most sensitive aspects of the Cuban foreign investment regime. Its removal or relaxation would improve the alignment between productivity, wages, talent retention and human resources management, although it will require a review of labour regulations, social security, collective bargaining, payroll taxation and controls on immigration and remote working.

Sectors with the greatest impact on trade and investment

Energy and fuels

The report proposes allowing private and foreign capital to participate in the purchase and sale of fuels, expanding the network of service stations and incorporating solar photovoltaic generation. It also provides for funding schemes for the energy transition, loans to legal entities and individuals, the use of international platforms by state-owned companies for the purchase and sale of fuels, and tax incentives for entities who incorporate renewable energy sources.

This sector could create opportunities in fuel supply, energy logistics, storage, service stations, distributed solar power, equipment financing, EPC, maintenance, batteries and energy efficiency. However, it will be necessary to ascertain whether the liberalisation extends to infrastructure ownership, trade margins, direct imports, licences, pricing regimes and access to foreign currency.

Tourism, property and franchising

Tourism appears to be one of the sectors undergoing the most extensive liberalisation. New business models are being considered, including rentals, usufruct agreements, the sale of property on a case-by-case basis, property development in tourist areas, joint ventures and rentals for marinas, car hire by joint ventures, foreign investment and non-state models, private or joint venture travel agencies, local destination managers and the international expansion of Cuban franchises.

For foreign entrepreneurs, this may open up opportunities in hotels, marinas, tourist transport, inbound travel agencies, local experiences, catering, tourist retail, franchises, asset management, holiday properties and complementary services. Particular attention should be paid to property ownership, surface rights or usufruct, authorisations on a case-by-case basis, the regime for foreign currency receipts and new environmental or tourism-related charges.

Retail, gastronomy, services and distribution

The measures aim to prioritise private companies and foreign investment in trade, gastronomy and services; reorganise the wholesale market; authorise unlimited wholesale and retail trade by foreign entities; create chains of shops, restaurants and national brands; invite foreign franchises; and establish auditable public tenders for certain premises and services.

This is one of the most significant changes for companies in the consumer goods, food, retail, distribution, catering, durable goods, industrial supplies, logistics and franchising sectors. If implemented with clear rules, it would reduce long-standing barriers to direct trade. The key will be to understand the requirements regarding licensing, currency of payment, imports, tariffs, pricing, competition, employment contracts and indirect taxation.

Agriculture and food

The agricultural sector incorporates measures on indefinite usufruct, the allocation of land based on production projects, authorisation for MSMEs in agriculture, the import and export of fuels and inputs by cooperatives, foreign currency accounts both within and outside Cuba, investment financing, direct contractual relationships between producers and traders, and the creation of a development bank.

For foreign companies, there may be opportunities in agricultural inputs, machinery, irrigation, seeds, fertilisers, storage, processing, cold chain logistics, financing, procurement of produce, exports and agro-industrial projects. The key restriction will remain state ownership of land; therefore, legal certainty will depend on the actual scope of usufruct rights, their transferability, duration, guarantees, termination and the possibility of financing.

Digital infrastructure and technology

It is proposed to allow foreign investment in data centres operated by the Cuban telecommunications company ETECSA, mobile networks and other digital infrastructure, except for those linked to national security. A national technology hub, the use of artificial intelligence in public administration and competitive remuneration for the technology sector are also envisaged.

This section may be of interest to operators in telecommunications, cloud computing, cybersecurity, software, digital payments, artificial intelligence, administrative automation and data centres. It will be essential to understand restrictions relating to national security, data regulations, localisation requirements, licensing, cybersecurity, public procurement and maximum foreign ownership.

Non-state management models and private companies: a new market for local shareholders

The measures envisage a significant expansion of the role of non-state management models. It is proposed to approve pending applications, reduce incorporation times and recognise as private companies those exceeding the 100-employee threshold. It is also proposed that an individual may own more than one private company, to expand corporate structures – no longer limited to limited liability companies – by authorising participation through shares and granting real rights such as usufruct and surface rights.

For foreign entrepreneurs, these measures could create a broader ecosystem of suppliers, distributors, franchisees, logistics operators, minority shareholders and B2B clients. The ability for private companies and cooperatives to import and export directly would reduce dependence on state intermediaries and enable more efficient commercial structures.

Authorisation to open bank accounts abroad is another critical measure. It can facilitate payments to suppliers, inventory management, e-commerce, international contracting and the financing of operations. However, its implementation will require clear rules on ownership of funds, repatriation obligations, taxation, banking compliance, anti-money laundering controls, the use of foreign currency and reporting to the Central Bank or tax authorities.

State-owned companies, public assets and future commercial companies

The package introduces a significant transformation of the socialist state-owned company. It proposes expanding their powers to carry out any lawful activity, decentralising pricing, allowing greater flexibility in the allocation of profits, resizing the Higher State Enterprise Management Organisations, and permitting the creation, merger, liquidation or restructuring of enterprises. Of particular importance is the provision for bankruptcy, liquidation and restructuring procedures, as well as the conversion of state-owned companies into commercial companies organised as private limited companies or limited liability companies.

For foreign investors, this would open up three avenues: the acquisition of shares in corporatised state-owned entities; investment in monetised state assets; and partnerships with state-owned companies subject to rules more closely aligned with corporate accounting and financial discipline. However, the document provides a clarification on the matter, stating that the State would define its shareholding on a sector-by-sector basis and retain a majority stake in strategic sectors. It will therefore be crucial to ascertain which sectors will be deemed strategic, what political and economic rights minority shareholders will have, what corporate governance rules will be adopted, and whether there will be exit mechanisms, dividends, dispute resolution and protection against regulatory changes.

The creation of insolvency or liquidation procedures may improve the economic rationality of the system, but it also introduces a new risk for foreign counterparties: state-owned companies that were previously able to operate with budgetary backing would be exposed to restructuring or liquidation if they prove unviable, particularly against a backdrop of successive devaluations and subsidy cuts.

Foreign exchange, banking, payments and exchange rate risk

The chapter on banking and foreign exchange contains some of the most significant measures for any commercial transaction. The announcement envisages greater private capital participation in the financial sector, the possible establishment of private corporate banks supervised by the Central Bank, non-bank entities for microcredit, the removal of restrictions on foreign currency payments between foreign suppliers and Cuban counterparties, new financial products, a digital foreign exchange market, private bureaux de change, foreign exchange auctions, and a reorganisation of the official market and the remittances sector.

The measure with the greatest financial impact is the provision for successive devaluations of the national currency to adjust the exchange rate, with the warning that companies unable to withstand these conditions would be wound up.

This requires any investment or contract to consider scenarios relating to exchange rates, indexation, currency of payment, convertibility, access to foreign exchange, offshore accounts, repatriation of dividends, hedging of import costs and the counterparty’s solvency.

The proposal that foreign investors may open accounts abroad without prior authorisation, by simple notification, and gain direct access to the foreign exchange market, has the potential to transform the bankability of projects. However, up to implementing regulations are in place, this measure should be regarded as a regulatory expectation rather than an operational guarantee.

Legal and regulatory risks of the transition

The main risk for foreign entrepreneurs lies not only in the content of the measures, but also in the gap between political announcements and enforceable regulations. The package requires far-reaching reforms to laws, decree-laws, ministerial resolutions, and banking, tax, labour, customs, company and sector-specific regulations. Until these regulations are published, the ability to structure binding transactions will be limited.

The key areas to monitor are:

• • Foreign investment regime: permitted forms of investment, authority with competence, timeframes, tacit approval, guarantees, repatriation, dispute resolution and participation in private companies.

• • Company law: issue and transfer of shares or equity interests, minority rights, dividends, corporate governance and the acquisition of equity interests in state-owned companies.

• • State-owned assets: sale procedures, valuation, tendering, excluded sectors and protection against reversion or policy changes.

• • Foreign exchange: convertibility, access to auctions, offshore accounts, repatriation, payments to suppliers, remittances and applicable exchange rates.

• • Taxation: VAT, customs duties, incentives, sector-specific taxes, the obligation to issue electronic invoices and the effective tax burden.

• • Employment: direct recruitment, minimum wage, collective bargaining, remote working, social security and liability for redundancies.

• • Insolvency: liquidation of state-owned or private companies, priority of claims, continuity of contracts and guarantees.

• • Import/export: negative nomenclature, licences, customs, wholesale/retail trade and sector-specific restrictions.

• • International compliance: sanctions, banking controls, source of funds, beneficial ownership, anti-corruption and payment traceability.

Preliminary recommendations for foreign business owners

Up to the time the implementing regulations are published, Dávalos Abogados recommends that foreign entrepreneurs interested in taking advantage of this window of opportunity adopt a preparatory strategy:

• Identify priority sectors in which the package explicitly announces liberalisation: tourism, trade, energy, fuels, agribusiness, transport, digital infrastructure, services and retail.

• Identify potential local partners, both state-owned and private, bearing in mind that Cuban private companies would become investment vehicles or joint ventures.

• Design flexible structures with the capability of adapting to corporate investment, partnership agreements, franchising, distribution, supply, rental, usufruct or surface rights.

• Model exchange rate scenarios, including successive devaluations, payments in foreign currency, inflation, import costs and temporary restrictions on currency convertibility.

• Include robust regulatory adaptation clauses in memoranda, preliminary agreements and contracts, particularly regarding foreign exchange, taxation, authorisations, termination and regulatory force majeure.

• Strengthen counterparty due diligence, particularly in state-owned companies that may be restructured or wound up, and in private companies subject to new corporate regulations.

• Monitor implementing regulations, in particular those affecting foreign investment, commercial companies, banking, foreign exchange, employment, taxation, import/export, insolvency and property rights.

• Assess international compliance before committing funds, given the interplay between Cuba’s opening up, international banking restrictions and any sanctions that may apply depending on nationality, sector, counterparty or currency.

Conclusion

The measures approved on 18 June 2026 represent one of the most far-reaching signs of economic liberalisation in Cuba in years. For foreign investors, the package may create opportunities in private investment, equity acquisitions, direct trade, tourism, energy, agribusiness, technology, services, banking and foreign exchange. At the same time, the process ushers in a phase of considerable legal uncertainty: actual viability will depend on the depth, coherence and promptness of the legislative and regulatory reforms that are adopted.

The scale of the current crisis demands that this legislative development proceed with the amendments properly coordinated, but with the utmost speed. Otherwise, the loss of its ‘magnet effect’ and the progressive deterioration of material conditions in Cuba would render the initiative meaningless, leaving the announcement without any effective translation into reality.

The general recommendation is to actively monitor regulatory developments, prepare entry strategies and sector-specific due diligence, but to make any significant binding commitments conditional upon the publication of clear rules on authorisation, foreign exchange, taxation, ownership, employment, repatriation and dispute resolution.