New Vehicle Regulations in Cuba: What Are the Implications for Buying, Selling, and Importing?

The Cuban administration has greenlit an update to the policies governing the transfer of ownership, marketing, and importation of motor vehicles, trailers, and semi-trailers. This announcement was made by Prime Minister Manuel Marrero Cruz during the fourth ordinary session of the National Assembly in its tenth legislature. Marrero highlighted that the final adjustments to the complementary legal regulations are in progress and will be published before the year's end.

This new policy aims to provide a more modern framework for vehicle management in a country that has traditionally faced significant restrictions and high costs in vehicle transactions, both in the state-run and informal markets.

Anticipated Changes in Vehicle Policies

The updated regulations might introduce changes in several areas, including:

• Procedures for transferring vehicle ownership
• New conditions for importing vehicles and their parts
• Regulation of vehicle sales in both state-run and private markets

These adjustments could have a profound impact on vehicle access and circulation, a sector already constrained by economic and regulatory limitations.

Potential Effects on the Cuban Population

While the authorities have yet to disclose the final details, the Cuban populace is hopeful that these regulations will alleviate some of the current challenges associated with accessing vehicles. Importing vehicles has historically been a hurdle due to high tariffs and state-imposed restrictions.

The release of these regulations will be crucial to understanding how the government plans to balance vehicle demand with the country's economic conditions, at a time when costs and accessibility are significant challenges for Cubans.

Recent Developments

In September, Minister Eduardo Rodríguez Dávila announced that the Cuban government has approved the buying and selling of vehicles between private individuals and companies. Previously, private individuals could transfer vehicle ownership among themselves, and legal entities could do the same. However, legal entities were not allowed to transfer ownership to private individuals.

With the new decisions, the transfer of ownership is now open between all private individuals and legal entities. However, for state-owned or state-participated legal entities, transferring ownership to a private individual requires approval from the Council of Ministers.

For instance, a microenterprise can transfer vehicle ownership to a private individual, as can a religious organization, a foreign representative office in Cuba, or a branch office. The procedure mirrors the current process for natural persons: before a public notary, payment of the transaction value, and corresponding tax, all through the bank.

Diplomatic foreign legal entities remain prohibited from buying or selling vehicles to private individuals.

Rodríguez Dávila also noted that private individuals can purchase vehicles from authorized dealers in convertible currencies, such as IMPEXPORT and CIMEX S.A. The vehicles for sale come from imports and those that end their tourism rental service. The sales prices are set in correlation with the market among private individuals, with a margin ranging from 350% to 500%, of which 30% is the dealer's commercial margin, and the rest is a special tax credited in the national currency at a 1x24 rate in a fund managed by the Ministry of Transport.

For legal entities, the sale price is the acquisition or import cost, plus a commercial margin of up to 30%. An additional tax applies to vehicle classes such as motorcycles, cars, rural cars, and pickups, at rates of 100%, 150%, and 200%, respectively.

Controversy Over Vehicle Pricing

This controversial issue has sparked criticism against the regime due to the exorbitant prices of imported cars in Cuba, which are nearly unattainable for highly qualified professionals in the country. The leader also shared recent data on import vehicle pricing in Cuba, with infographics detailing how the government determines the cost of imported vehicles. They used a hypothetical value of 10,000 USD "to facilitate understanding."

The final vehicle price considers the Supplier Price in Cuba, including freight and insurance. The base price in the infographic is 10,000 USD or euros. Import Expenses, comprising tariffs, customs services, handling, and vehicle transport, account for approximately 6% of the supplier's price, equating to 600 USD or euros.

The next component is the Commercial Margin Rate, which can reach up to 20% of the base price, resulting in an increase of 2,120 USD or euros, bringing the dealer's selling price to 12,720 USD or euros. Additionally, a Special Segment or Range Tax applies, varying by vehicle type. For high-end cars, this tax is 35%, amounting to 4,452 USD or euros, while for other vehicle types, it can be 25% or 15%.

The total payable by the buyer sums all these components. For instance, the final price for a car, rural car, or pickup is 15,900 USD or euros; a high-end car reaches 17,172 USD or euros; and vehicles like minibuses, motorcycles, or tricycles range from 14,628 to 15,264 USD or euros.

Until 2013, Cubans could not purchase new or used motorcycles, cars, pickups, and minibuses. Raúl Castro allowed the purchase of second-hand and new vehicles, but only from the government and with a 100% tax. Prior to this, interested parties needed personal approval from the country's vice president, famously known as the "letter."

In 2011, the regime authorized the buying and selling of used cars among Cubans but did not remove the requirement for the vice president's signature. Additionally, new cars could not be purchased. In November, Cuba's Ministry of Transport announced that the implementation of updates to the vehicle marketing policy in the country would be delayed to adjust the regulations with the involved organizations. Now, Marrero Cruz indicated that the final information would soon be made public.