Doing Business With Cuba: What You Need To Know

• Published date: 19 July 2023
• Subject Matter: Corporate/Commercial Law, Government, Public Sector, International Law, Inward/ Foreign Investment, Corporate and Company Law, International Trade & Investment
• Law Firm: Diaz Trade Law
• Author: Ms Jennifer Diaz

Cuba is home to 11 million consumers and a growing private sector. Its proximity to the United States (the Port of Havana is only 198 nautical miles from the Port of Miami) makes the country a natural trade partner. While changes in policy over the last several years have unlocked new business opportunities in Cuba, there are still regulatory barriers that individuals and companies should be aware of.

U.S. Embargo

The United States imposed a comprehensive economic embargo on Cuba in the 1960's which restricts most trade between the two countries. It also includes restrictions on travel and investment.

Although the U.S. faced pressure to end the embargo, the state of affairs remained largely unchanged until 2014.

In December 2014, President Obama made a historic announcement: "Today, the United States is taking historic steps to chart a new course in our relations with Cuba and to further engage and empower the Cuban people." By January 16, 2015, both the U.S. Treasury Department and the Office of Foreign Assets Control (OFAC) amended its Cuban Assets Control Regulations, and the U.S. Department of Commerce's, Bureau of Industry and Security (BIS) amended the Export Administration Regulations with a "Support for the Cuban People" license exception. The license exception was most significant for travel, telecom, building materials and agricultural equipment, financial services, and personal importations.

OFAC and BIS issued additional new rules on January 16, 2015, September 21, 2015, January 27, 2016, March 15, 2016, October 14, 2016, November 9, 2017, and June 8, 2022.

While these new rules made progress in enabling business in Cuba, many barriers still existed for private investment and entrepreneurship for Cuban nationals.

Challenges for Privately Held Cuban Companies

State-owned businesses have dominated the Cuban economy for decades. This is partially because private businesses in most sectors have historically been banned. Regulations have long prevented Cuban nationals from forming corporations in most cases. Even when private businesses have been permitted, business owners have been required to partner with the government.

In 1981, public sector employment was over 90%, and only decreased to 78% by 2006. Cuban regulations have also prevented international businesses from forming a business venture with citizens. The only way for an international company to expand to Cuba was for the company to partner with the government, posing significant...