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The Cuban regime announced this Thursday the gradual implementation of the Value Added Tax (VAT) as part of a package of 176 economic transformations presented at the Third Extraordinary Session of the National Assembly of People's Power, as reported by the official Granma.
The measure, included in Axis 12 of the tax system transformation document, establishes that VAT will begin to be applied to certain production and consumption chains, with reduced tax rates for items in the basic basket of goods and services.
The president Miguel Díaz-Canel noted that Cuba will move towards "a creditable value-added tax (VAT) supported by electronic invoicing to prevent cascading tax imposition," referring to the mechanism that differentiates VAT from the current sales tax, which does not allow for tax credits between stages of the production chain.
Cuba has historically not had a generalized, creditable VAT.
Their tax system has operated with a 10% sales tax on goods and a services tax, both of which lack a credit mechanism between production stages. The Law 181/2025, approved in December 2025, already consolidated a system of 22 taxes with a maximum fiscal deficit of 74.5 billion pesos for 2026.
The tax package also includes the establishment of electronic fiscal invoicing with incentives to promote its adoption, as well as a bonus on the sales and services tax based on the levels of banked sales.
Among the additional measures of Axis 12 are the reduction of the corporate tax burden related to profit tax, a reduced tax rate for the agricultural sector, and a regime of accelerated depreciation for the acquisition of machinery and food production technologies.
The regime also plans to update the personal income tax to align it with the inflationary scenario, increasing the tax-free threshold to the level of the country's average salary by the end of 2025.
Fixed amounts for several taxes will also be increased: the tax on land transportation according to vehicle type and fuel, the tax on vessels, the tax on documents, environmental taxes, and the fee for registering advertisements and commercial propaganda.
The transformations were presented by Prime Minister Manuel Marrero Cruz before the deputies gathered at the Palacio de Convenciones in Havana, with the remote participation of Army General Raúl Castro and the physical presence of Díaz-Canel. The process received 390 transformation proposals, of which 66.7% were accepted, and the Political Bureau included 69 additional recommendations in the final document.
Marrero Cruz described the measures as a sovereign response to the crisis, and not as a renunciation of socialism: "The presented transformations do not constitute a concession, but rather a sovereign adjustment of development instruments to the specific circumstances of the country."
The regime attributes the crisis to U.S. sanctions, although the reality is that decades of a centralized economic model have been the structural cause of the collapse.
The package of 176 measures across 23 axes represents, according to the government itself, the most significant change to the Cuban economic model since the Special Period of the 1990s, and includes the acceptance of market mechanisms, private banking, and the opening up to investments by Cubans abroad.
These are unprecedented free-market measures aimed at revitalizing the island's weakened economy, in the context of increasing pressure from the United States.
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