The Cuban government, under the leadership of Prime Minister Manuel Marrero Cruz, has enacted Decree-Law 114, a regulation aimed at formalizing partnerships between state and private business entities in Cuba.
"Today marks the implementation of Decree-Law 114, which structures partnerships between state and non-state business entities, introducing new business models to stimulate economic activity and enhance collaboration among various stakeholders," Marrero announced on his X account.
Approved by the Council of State on December 10, 2025, the legislation was published in the Official Gazette on March 3, 2026, and it came into effect 30 days later.
Types of Business Partnerships
The decree outlines four distinct types of partnerships: the creation of mixed Limited Liability Companies, acquisition of shares in existing private companies by state entities, absorption of private companies by state enterprises, and economic association contracts without forming a new legal entity, as reported by CubaDebate.
Private involvement is limited to SMEs with up to 100 employees, as well as agricultural and non-agricultural cooperatives. Individual entrepreneurs engaging in commercial activities are excluded from participation.
State Control and Economic Strategy
Despite the new opportunities, state oversight remains pivotal. All operations must receive explicit approval from the Ministry of Economy and Planning, which is given a 10-day window to respond.
Mixed entities are not bound by the Economic Plan; however, they must report key metrics to the state in areas such as energy, investments, foreign exchange, and food resources.
Partnerships in the health, education, and defense sectors, including activities related to the Revolutionary Armed Forces and the Ministry of the Interior, are strictly prohibited.
Criticism and Economic Implications
Economists have voiced skepticism about the decree. Elías Amor cautioned that the private sector should not rush to celebrate, as without broader legal reforms, private businesses remain subordinated to state control.
Ricardo Torres from the American University criticized the decree's centralized and bureaucratic nature, while Daniel Torralbas speculated that the measure might be more about shoring up state enterprises in the short term rather than implementing a comprehensive long-term strategy.
Decree-Law 114 addresses a legal gap left since the legalization of SMEs in August 2021, when Decree-Law 46 explicitly prohibited mixed enterprises involving state and private capital.
Since then, the government has sanctioned nearly 10,000 SMEs by January 2024, employing 15% of the workforce and contributing 14% to the Gross Domestic Product. Nonetheless, Cuba's economy is in turmoil, plagued by inflation, fuel shortages, and a failing electrical system, consequences of 67 years under communist dictatorship.
Understanding the Impact of Cuba's New Business Law
What is Decree-Law 114?
Decree-Law 114 is a Cuban regulation that establishes formal partnerships between state and private business entities, introducing new business models to boost the economy.
Who can participate in these business partnerships?
Participation is open to SMEs with up to 100 employees and agricultural and non-agricultural cooperatives, but excludes individual entrepreneurs in commercial activities.
What sectors are excluded from these partnerships?
Partnerships in health, education, and defense sectors, including activities related to the Revolutionary Armed Forces and the Ministry of the Interior, are prohibited.