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The Free Zone Regime (FZR) is a set of incentives and benefits granted by the Costa Rican government to new export-oriented investments in the country, including manufacturing and services companies. The FZR is supervised by government entity Promotora del Comercio Exterior (PROCOMER), which is part of the Ministry of Foreign Trade of Costa Rica.
The Regime is granted to new projects with a minimum fixed assets investment of $150.000 within a Free Trade Zone Park or $2.000.000 outside a Free Trade Zone Park. The beneficiary has a maximum of three years or the time that PROCOMER establishes to complete the initial investment.
For the last two decades, Costa Rica has done a great effort to attract and retain foreign direct investment, which is supported by the Free Zone Regime, allowing investors located under the Regime to access tax breaks such as exemptions on import duties, corporate income tax, export taxes, local sales and excise taxes, capital taxes, no restrictions on capital/profit repatriation, among several other perks.
The incentives granted to FTZ companies are established under Article 20 of the Free Zone Regime law. The following summary chart comprehends the tax incentives in general terms:
|Income tax (statutory tax 30%)||First 8 years||0%|
|Remittances repatriation tax||No limit||0%|
|Value added tax||No limit||0%|
|Import, export, excise taxes||No limit||0%|
Beneficiary companies have to comply with the following responsibilities:
- To keep specific books and records authorized by PROCOMER to enter the operations of the company in connection with the goods subject to authorized tax exemptions.
- To provide the authorities any reports they may request on the use and destination of the articles to be imported under the Regime incentives, as well as allow them to conduct any pertaining verification.
- To sign a Contract of Operations with PROCOMER.
- To provide reports regarding employment levels, investment, national value added, or others specified in the Executive Resolution that grants the Regime benefits.
- To comply with any other obligations and conditions imposed to the beneficiary in the Executive Resolution that grants the benefits of the Free Zone Regime.
If you would like more information on the Free Trade Regime in Costa Rica, please contact Magnalex Abogados, Víctor José Mora firstname.lastname@example.org