Doing business with Cuba _United Kimgdom
Doing business in Cuba: Cuba trade and export guide
Updated 9 May 2014
Contents
1.Cuba export overview
Cuba has one of the
world’s few remaining centrally planned economies. The state controls 90% of
the economy and employs around 85% of the total workforce.
Contact a UKTI Cuba
export adviser for a free consultation if you are
interested in exporting to Cuba.
In 2011, over 300
measures were approved that aimed to turn Cuba into a more market oriented
economy. However, the decentralisation measures have not yet led to a
liberalised economy.
Cuba is a mostly a
service based economy. Its main export earnings come from healthcare,
biotechnology, pharmaceuticals, tourism and nickel.
Strengths of the
Cuban market include:
·
English is widely spoken and accepted as a business language
·
United States (US) economic embargo which reduces competition from
American companies
·
strategic position in the Caribbean and Central America
·
highly educated and skilled workforce
·
low labour costs
·
strong biotechnology sector
2.Challenges doing business in Cuba
Cuba is a unique
market. Despite the increasing opportunities for UK companies in Cuba, there
are still significant challenges. These include:
·
very slow decision making process, with most business decisions being
referred to high level government
·
all sales in Cuba are public sales, controlled by heavy regulation
·
delays for payments are likely
·
standard practice for the Cuban state to expect to buy on credit terms
of 1 to 2 years
·
US sanctions can be applied against
companies that breach the US economic embargo
against Cuba
·
some UK banks refuse deal with Cuba due to it being on the US Office of Foreign Assets Control (OFAC) list
3.Growth potential
3.1Economic growth
Cuba has shown
growth over recent years. However, growth has currently levelled at 3%. This is
during the transition process from a state-run economy to one that has more
private sector involvement.
3.2Free trade agreements
Cuba is a co-founder of the Bolivarian Alliance for the Americas (ALBA). It
integrates the countries of Latin America and the Caribbean.
Cuba maintains
special links with Venezuela. Since late 2000, Venezuela has provided Cuba with
oil on preferential terms. Oil is partly paid for with the services of Cuban
personnel, including some 20,000 medical professionals.
There are also
commercial agreements with China, Russia, Brazil and Vietnam.
4.UK and Cuba trade
In 2012, exports of
goods to Cuba saw an increase of 74% from 2011. However, significant UK-Cuba
trade is undertaken through countries such as Venezuela, Mexico, Panama, and
Spain.
The UK remains
underrepresented in the market compared to other countries.
Top UK exports to
Cuba (2012):
·
food and livestock
·
beverages and tobacco
·
crude materials
·
mineral fuels, lubricants, and related materials
·
animal and vegetable oils
·
chemicals and related products
·
manufactured goods
·
machinery and transport equipment
·
other manufactured goods
5.Opportunities for UK businesses in Cuba
UK Trade and Investment (UKTI) publish over 1,000 business opportunities
per month across all sectors and over 100 markets. Sign up to receive regularbusiness
opportunities alerts.
5.1Biotechnology and healthcare
The medical industry
is currently responsible for one of the largest shares of imports from the UK.
Biotechnology has the largest potential in the Cuban market.
Health services to ALBA countries account for 60% of all
exports from Cuba. The maintenance of this sector is a priority for the
government.
There are
opportunities for UK companies in:
·
high-tech products
·
lab supplies
·
partnerships for production and commercialisation
Contact the Sector Specialist alina.niebla@fco.gov.uk for more information on opportunities in the biotechnology and
healthcare sectors.
5.2Oil and gas
Around USD 3
billion has been invested by foreign companies in the last 7 years. In 2012
drilling started in the deep waters sector in the Gulf of Mexico where an
estimated 7 to 20 million barrels of oil are available. So far all attempts
have been unsuccessful. A second drilling stage is expected to begin in 2014
Cuban oil and gas
projects are largely monopolised by ALBA countries, however, opportunities still exist for UK companies.
Contact the Sector Specialist alina.niebla@fco.gov.uk for more information on opportunities in the oil and gas sector.
5.3Renewable energy
In 2013, a £140
million investment project was signed by UK Havana Energy and Cuban Azcuba for
the construction of 5 biomass power stations linked to the sugar industry.
A number of other
opportunities have been approved and are now available to interested companies.
These opportunities
are available for UK companies with expertise in the following areas:
·
solar energy
·
wind parks
·
biomass
·
hydro-energy
Contact the Director monica.lopez@fco.gov.uk for more information on opportunities in the renewable energy sector.
5.4Tourism
Tourist numbers
have steadily increased over the last decade to 2.7 million in 2012. The UK is
second only to Canada as the main source of tourists. Because of the large
number of British tourists in Cuba, the UK is in a unique position.
Opportunities exist for:
·
development and management of hotels
·
development of tourism facilities, such as golf courses and water parks
·
tourism services
·
hotel supplies
Contact the Director monica.lopez@fco.gov.uk for more information on opportunities in the tourism sector.
5.5Mining
The Cuban nickel
industry is one of the key sources of income for Cuba. It produces about 70
thousand tons of nickel per year and accounts for more than 30% of the world’s
known nickel reserves.
The Cuban
government is interested in speeding the exploitation of gold, silver, chrome,
copper and zinc, resources. This may provide opportunities for UK companies.
Contact the Director monica.lopez@fco.gov.uk for more information on opportunities in the mining sector.
5.6Transport
Cuba is in need of
a modernised of transport infrastructure. Opportunities exist for UK companies
in the following areas:
·
development of ports
·
enlargement of airports
·
road construction
·
ship building and repair
·
energy efficient cargo and public transport
Contact the Sector Specialist alina.niebla@fco.gov.uk for more information on opportunities in the transport sector.
6.Start-up considerations
The main routes to
market are:
6.1Selling from offshore
You can obtain a
business visa and travel to Cuba to do business. You can contract with a Cuban
importing agent to ship to a duty-free warehouse and distribute from there.
You cannot have an
office in Cuba and your executives cannot take up residence there. Cuban
authorities take a broad view of what constitutes an illegal office. Exporters
have been punished for operating unauthorised offices from residences and
hotels.
6.2Registered agency or office
Representative
offices of foreign companies are permitted under Decree Law 206 of 1996. Permits
are issued by the Cámara de Comercio de la República de Cuba.
The application requires
considerable detail about:
·
the legal status of your company
·
its technical capabilities
·
financial stability
Foreign documents
must be legalised in Cuba.
Licences are for 5
years and are renewable for 3 year terms.
The licence will
not allow your company to carry on wholesale or retail distribution. Your
company can be the consignee of an import shipment, but it cannot take
possession directly. You must employ a registered agent to physically handle
the goods.
To register, you
must have:
·
3 years experience making sales to Cuba of at least USD 500,000 annually
·
a minimum paid up capital of USD 50,000
·
at least 5 years business history
You should seek legal advice as the tax and legal obligations of
each business structure can differ.
7.Legal considerations
There is Cuban
legislation that has a direct impact on business development. Law 77 on Foreign
Investment establishes the rules for most trade and Investment activities. This
Law is expected to be revised in 2014.
7.1Standards and technical regulations
Suppliers and
manufacturers have an obligation to make sure products are safe. Products must
meet relevant safety standards, have clear instructions for proper use and
include warnings against possible misuse.
The Oficina
Nacional de Normalización (NC) is responsible for standards and technical
regulation in Cuba.
7.2Intellectual property
The National Office of Industrial
Property (OCPI) is responsible for
intellectual property rights in Cuba.
Cuba is also signatory to the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS). This has specific requirements, enforcement procedures,
remedies, and dispute resolution procedures.
8.Tax and customs considerations
8.1Goods and Services Tax (GST)
The rates for the GST vary depending on the goods, sector,
and currency. A rate of 2% applies to wholesalers and 10% to retailers. Raw
materials for industrial production and exported goods and services are
exempted from GST.
8.2Company tax
Companies
established in Cuba are subject to 35% of their taxable net profits. This may
increase to 50% for the exploitation of natural resources. There are exemptions
from company tax.
Foreign companies
without legal domicile in Cuba are subject to a 4% rate on their gross income
from a Cuban source.
8.3Individual income tax
Permanent residents
in Cuba are subject to 4% income tax on their worldwide income.
Temporary Residents
are liable for a personal income tax rate of 15% on their income obtained or
generated in Cuba.
9.Customs
A tax will be levied on all natural
and legal persons importing products into the national territory. The tax rates
and payment procedures are established by the Cuban Customs Law that can be
accessed at the Cuban Customs Authority website.
9.1Documents
The relevent export
documents and a user manual can be downloaded from the Cuban Customs Website.
10.Entry requirements
All visitors
require a tourist card which is usually issued with your air ticket. This can
also be bought at airports.
10.1Travel advice
If you’re travelling to Cuba for business, check the Foreign and
Commonwealth Office (FCO) travel advice page beforehand.
11.Contacts
Contact the UKTI team in Cuba for more
information and advice on opportunities for doing business in Cuba.
