Cuba Relaxes Some New Rules Regarding Private Enterprise

On December 7 Cuba implemented new rules for its private sector (the “self-employed” in Cuban parlance) that had been announced on July 10.[1]

However, these new rules had been relaxed or liberalized in the following respects from those earlier announced:

• The proposed limit of one self-employment license per person was eliminated.
• Licenses for 26 of the 27 activities that had been suspended will be resumed. (The other suspended category (self-employed computer programmers) will remain suspended until specific norms for this area are developed.)
• The proposed limit on the maximum capacity of 50 customers for food-service establishments was eliminated, with capacity to be determined by the size of the site to be utilized.
• The required minimum balance of a commercial bank account: will be reduced from three monthly tax quotas to two, for operations in six categories (food services, restaurants and cafeterias; bar and recreational services; rental of rooms and spaces; construction, repair and maintenance services; and transportation of passengers in the capital).
• Up to 35% of income of the foregoing establishments need not be deposited in the commercial bank account, to provide greater flexibility.

In announcing these changes, the Minister of Labor and Social Security Margarita González Fernández commented that, as projected, this modality of employment has generated jobs, expanded options for the population, and freed the state from the responsibility of managing small-scale activities that do not play an essential role in the national economy.

She also emphasized these adjustments reflect the government’s intention to recognize the positive role played by self-employment workers in the updating of our economic model, and to take into consideration the opinion and experiences of those directly involved, with the goal of establishing a climate of order and discipline in the sector.

However, there were no changes to the proposed rules regarding private taxis obligating drivers, for example, to purchase a minimum amount of fuel from state gas stations with huge markups in order to curb the black market for fuel amid a decline in oil supplies from ally Venezuela. The new rules  also fix prices for the set, shared routes.[2]

Some private drivers in Havana have said the new rules are so stifling that they prevent them from making a living, so they would rather give up their licenses to operate as taxis. The Vice Minister for Transport Marta Oramas said that around 800 drivers had handed in their licenses so far.

Anticipating this reduction in an already severe shortage in public transportation, the government said it was importing hundreds of microbuses and buses to alleviate the shortage.

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[1] Martinez Hernández, Legal norms governing self-employment modified, Granma (Dec. 6, 2018); These are the new regulations to control the Cuban private sector, Diario de Cuba (Dec. 7, 2018). See also Cuba Announces New Regulations for Private Businesses, dwkcommentaries.com (July 10, 2018); More Details on New Cuban Regulations on Private Business, dwkcommentaries.com (July 11, 2018).

[2] Reuters, Cuba Reinforces Public Transport as It Clamps Down on Private Taxis, N.Y. times (Dec. 6, 2018).