Cuba Expands Again Role Of Private Sector- Suppliers, Foreign Currency Access
/Resolution 52 - 2021 on the Financial Procedure to be applied in retail sales in foreign currency Through Resolution No. 52/2021 of the MEP it is approved that the forms of non-state management are also contracted as suppliers of the commercial network in freely convertible currency, incorporating them in the financial procedure to be applied, as another step in the similar conditions of performance of the economic actors of our society.
LINK To Resolution 52-2021 (Spanish)
LINK To Resolution 52-2021 (English)
Resolution No. 52/2021
WHEREAS: Agreement 5959 of the Executive Committee of the Council of Ministers of April 2, 2007, in its second section, numeral 7, establishes as one of the specific functions of the Ministry of Economy and Planning participation in the preparation and proposals of actions for the administration and distribution systematic analysis of the country's currencies, including facilities and returns, taking into account take into account the established priorities and exercise control over the decisions adopt.
WHEREAS: As part of the measures aimed at strengthening the industry national, was approved the hiring of non-state forms of management such as suppliers of the commercial network in freely convertible currency in this sense it is necessary to insert them in the financial procedure to be applied to sales retailers in foreign currency and consequently repeal Resolution 221 of 14 October 2019 from the Minister of Economy and Planning.
THEREFORE: In the exercise of the faculty that has been conferred on me in subsection d) of article 145 of the Constitution of the Republic of Cuba,
I RESOLVE FIRST: Approve the following:
“FINANCIAL PROCEDURE TO APPLY TO THE RETAIL SALES IN FOREIGN CURRENCIES
Article 1. Importing entities selected by the Ministry of Commerce Foreign and Foreign Investment, which are defined in the corresponding regulation of that body, request the Central Bank of Cuba to open a bank account in foreign exchange, for income from retail sales made in that country currency.
Article 2. One hundred percent (100%) is paid to the aforementioned bank account. of the currencies that are obtained by the sales that are made in that currency.
Article 3. The liquidity received in these accounts from sales is used by the entities referred to in article 1, to replace the goods that are they trade in currencies or acquire others for sale in the same currency.
Article 4. The replacement or acquisition of the merchandise can be done through importation, purchase on consignment, in the national industry, in another entity of the economy, or to the forms of non-state management.
Article 5.1. When the replacement is carried out by importation, this can be executed with payments on demand or on credit, with or without bank instruments; in both In cases, payment is made using the cash in the foreign currency account. 2. In credit purchases, funds must be reserved for the payment of the obligation. upon expiration.
Article 6. When the replacement is made through the purchase of merchandise in consignment, payment is made with the currencies entered into said bank account, in accordance with the procedures established in the country.
Article 7. In the event that the replacement is made by way of purchase from the industry national, payment is made in foreign currency, from the bank account used for this purpose.
Article 8. When the entities referred to in article 1, order payments from your foreign currency accounts to Cuban peso accounts (CUP), at the exchange rate established, of the entities of the national industry for the sales that these carried out, the Central Bank of Cuba will credit one hundred percent (100%) of the liquidity in the corresponding liquidity capacity (CL) accounts.
Article 9. The entities of the national industry use the Cuban pesos and the corresponding liquidity they receive for this concept, for the production of goods and the provision of services for retail sales in foreign currency.
Article 10. In the event that the replacement is made by means of the purchase to another entity of the economy, whose account is not denominated in CUP, the payment is made in foreign currency and said entity will operate in accordance with what is currently established.
Article 11.1. Once the banking-financial mechanisms are established in the country to access loans with or without liquidity support, the entities of the National industry, or others from the economy, can take these financing to make productions for sale in foreign currency. 2. With the income from sales in foreign currency to the entities to which it is referred to in article 1, they amortize the financing received and can take new credits to guarantee the continuity of the production process.
Article 12.1. When the entities referred to in article 1, order payments from their foreign currency accounts to non-state management for sale, these are received in the accounts in freely convertible currency that are enabled at the respect and in accordance with the provisions of the Central Bank of Cuba, the eighty (80) percent of what is billed to the entity. 2. The entities of article 1 are in charge of applying the percent (%) mentioned in the previous article, transfer that amount to the account in the form of non-state management and release the remaining twenty (20) percent to central liquidity. 3. The equivalent value in Cuban pesos at the official exchange rate of twenty (20) percent released, it is transferred by the entities of article 1 to the account in CUP previously defined by the form of non-state management.
Article 13. Activity levels and other indicators related to these operations, are taken into account by the subjects of the plan in the elaboration and execution of the economy plan.
SECOND: Repeal Resolution 221, of October 14, 2019, issued by the that solves.
THIRD: This resolution enters into force three (3) days after its publication in the Official Gazette of the Republic of Cuba.
BE PUBLISHED in the Official Gazette of the Republic of Cuba. FILE the original signed at the Legal Directorate of this Ministry.
GIVEN in Havana, on July 12, 2021.
Alejandro Gil Fernandez, Minister
Granma
Havana, Republic of Cuba
5 August 2021
Micro, small and medium-sized businesses in Cuba: A smooth start
Minister of Economy and Planning Alejandro Gil Fernández explains new legal norms recently approved by the Council of Ministers, which will guide the functioning of these important economic actors
The first small private companies will emerge from currently operating groups of self-employed workers, like the successful Pinturas Coronas. Photo: Ricardo López Hevia
The creation in Cuba of micro, small and medium-size businesses (MSMEs), as part of the overhauling of the economic actors has risen an intensive debate and a lot of expectations, especially in the non-state sector. As it has was recently reported by Deputy Prime Minister and Minister of Economy and Planning (MEP) Alejandro Gil Fernández on Cuban television’s Mesa Redonda program, they are currently working at an accelerated pace in the norms that will rule the organization and functioning of these companies dedicated to the production of goods and services, conceived with legal personality, both for the state and private sector.
Regarding private MSMEs, he says “the first MSMEs will be created from the current businesses run by self-employed workers, a sector that hires a lot of workers”. In the case of state-run businesses, he explains, “we are conducting a study to see which organizations could join this experience, always with the priorities of the country as their main focus.”
“The first step is to organize what we already have,” the Economy Minister said referring to the undergoing restructuring, in a gradual manner and under the leadership of the Government, in order to “release the productive forces, lift hurdles and boost social responsibility among these economic actors.”
Meanwhile, Economy and Planning Deputy Minister Johana Odriozola Guitart, provided more details on the process of creation of the norms, in which the academy has been actively involved and they have considered the preparation of several legal provisions raging from the highest to the lowest levels of legislation hierarchy. “Right now, we are agreeing on the basic principles of the legislation,” she says and stresses how the creation of these new actors will bring benefits in the financial and hiring order to the businesses currently in operation.
MSMEs, which will have the same management model regardless of the type of property, will take the legal form of Private Limited Company, Odriozola Guitart continues. “It means that, unlike other countries, our norms will have a larger scope because we must regularize the characteristics of economic subjects that does not exist so far,” she underlines. The Deputy Minister explains that the norms are directed to both state and private property, although it does not rule out the existence of joint SMEs in the future.
The purpose of these norms are to provide a smooth start without bumps or legal vacuums. Subsequently, public policies will be evaluated in order to allow a bigger contribution and integration to put talent at the service of the country’s development, the deputy minister adds. Given the novelty of this topic in the Cuban economic landscape, the Minister of Economy and Planning noted that the ministry’s website has provided responses to some of the most frequently asked questions raised recently. The population can submit questions on the new legal framework for these economic actors to the email address: actoreseconomicos@mep.gob.cu.
Presented below are several examples:
How are businesses in Cuba classified as micro, small and medium-sized? MSMEs in Cuba are classified according to the number of workers involved: Micro: from 1 to 10. Small: from 11 to 35. Medium: from 36 to 100.
-Is the classification by number of workers used worldwide? No, it is not. The number of workers is the most widespread criterion, but MSMEs can be classified based on other elements. The most commonly used are the volume of annual sales and the assets value. Monetary restructuring makes it more complex to adopt billing indicators for the MSMEs in Cuba for two main reasons: the new monetary order establishes only one type of exchange rate for all economy actors and it makes impossible to compare historical records with the current conditions.
What is understood as ‘occupied’? In the MSMEs, it includes all natural persons who take part in the activity of the business, both as members and as employees.
How many members can there be in an MSME? An MSME can be formed with as many members as the company deems necessary as long as they comply with the number of occupied people established by law.
What are the advantages of being a legal person? It grants access to financing and more favorable financing conditions, it increases credibility and trust among the clients and increases the chances of positioning a brand in the market and makes contract relationships easier. In the case of debts, the company can use the business equity to pay it off without affecting the personal equity of the partners and it allows to expand equity and bring in new members. Likewise, partners and employees can have access to the same social security benefits as state employees.
What is a Private Limited Company? It’s a business with equity divided in social shares and composed of the contributions from the members’ personal equity. The organization of this company means there is a separation between the personal equity of the members and the social equity of the company, since the members do not have to comply with the obligations acquired by the company with their own equity, but with the equity of the Private Limited Company.
Is social equity a must for the organization of a MSME? The MSME should be organized with social equity that should be reflected on the organization documents. A minimum social equity is not required. The contributions of all members makes the social equity of the MSME. Social equity has three main functions: Productivity: this function basically has an economic content, by which equity serves as capital funds to obtain profit, through the execution of the corporate purpose. It determines the position of the member in the company as it numerically provides the percentage of its engagement. Guarantee to creditors: as long as it is not possible to distribute profits because the company's net worth does not exceed that amount and allows creditors to know the company's net worth situation in order to meet their obligations.
What is the MSME liable for its obligations and what is the scope of its liability? The MSME is liable for its obligations to third parties with all the assets that make up its patrimony.
What will be the bodies of the MSME? The MSME will have the following bodies: Board: an assembly body in which agreements related to the operation of the company are adopted. Administrative body: responsible for the management and representation of the MSME. Supervisory and control body: oversees compliance with the provisions of the legislation in force. It will have its attributions determined in the legal norm, without prejudice that the partners may incorporate others. In the case of MSMEs with a single owner, it will obviously not be possible to create an assembly body. This body will include the sole partner. (Translated by ESTI)
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Cuba Expands Again Role Of Private Sector- Suppliers, Foreign Currency Access Aug 5, 2021
