On Wednesday, Cuba's Council of State unveiled Decree-Law No. 120, a regulation designed to outline the organizational and operational principles of the state enterprise system, while acknowledging the financial, economic, administrative, and management autonomy of socialist state businesses.
The regulation appeared in the Official Gazette No. 72 Ordinary of 2026, spanning pages 2 to 17, and bearing the signature of Juan Esteban Lazo Hernández, the president of the National Assembly of People's Power.
Grounded in Article 27 of the Cuban Constitution, the decree recognizes the socialist state enterprise as the "primary entity of the national economy," granting it autonomy in both administration and management.
According to the decree, the state enterprise system encompasses the socialist state enterprise and enterprise groups, which can assume three legal forms: a state enterprise, a subsidiary, or a commercial company.
Classification and Objectives
The decree categorizes enterprises into four types: strategic, social protection and public service, competitive, and those focused on science and technology.
Among its key objectives, the regulation seeks to decentralize the power to create state business entities, promote economic, financial, administrative, and management autonomy for companies, and enhance the economy's capacity for exporting, generating foreign currency, and integrating into the international market.
Institutional Oversight
The National Institute of State-Owned Enterprises (INAEES), established in January 2026 and reporting to the Council of Ministers, is tasked with guiding the transformation of Cuba's state enterprise sector, which includes over 2,000 companies.
The decree emphasizes a gradual shift of oversight responsibilities for entities within the state enterprise system to this Institute.
Additionally, the regulation addresses corporate social responsibility and the governance structures of each enterprise, including the role of the state as the owner’s representative and the management board.
Complementary Measures
Decree-Law 120 is a component of the broader implementation of 176 economic and social transformation measures approved by the National Assembly on June 18 and 19, 2026, which prioritized the reform of the state enterprise system as a central focus.
The Council of State had initially passed the regulation during a special session in July, presided over by Lazo Hernández, before its official release on Wednesday.
Alongside Decree-Law 120, Gazette No. 72 includes four supplementary regulations: Resolution 170/2026 from the Ministry of Finance and Prices, which outlines the financial and tax procedures for the state enterprise system, and Resolutions 1, 2, and 3/2026 from INAEES, detailing organizational movements, social objectives, financial relationships with the state, and governance board structures, respectively.
Understanding Decree-Law 120 and Its Impact on Cuban Enterprises
What are the main objectives of Decree-Law 120?
Decree-Law 120 aims to decentralize the creation of state business entities, promote autonomy in economic and administrative aspects, and strengthen Cuba's economic capacity for exports and international integration.
How does the decree categorize state enterprises?
The decree classifies state enterprises into four categories: strategic, social protection and public service, competitive, and those focused on science and technology.
What role does the INAEES play under this new regulation?
The INAEES is responsible for directing the transformation of the state enterprise sector, overseeing more than 2,000 companies, and gradually assuming oversight responsibilities.