Free Trade Zone Incentives
General Aspects
The Free Trade Zone law is comprised of an incentive and benefit package granted by the Costa Rican government for those companies that perform new investments in the country and comply with certain requisites. Among these basic requisites are to perform an initial capital investment of at least $150,000, if installation occurs in an industrial park, or $2,000,000 for those companies wishing to install outside the parks (only manufacturing plants).
The area designed for those purposes is called "Free Trade Zone" and is an area without a resident population. This area is authorized by the Government of Costa Rica for said operation. PROCOMER is the entity responsible for managing this zone, including receiving applications to classify company for the free trade zone status.
Beneficiary companies
Among companies that can benefit from this scheme are:
-
Companies that manufacture, process and assemble goods to be exported or re-exported.
-
Companies that only delivery, re-pack or re-distribute non-traditional goods to be exported or re-exported.
-
Companies that export services to companies or individuals established abroad or under the Free Trade Zone Scheme.
-
Companies that manage parks dedicated to company installation under the Free Trade Zone scheme.
-
Research organizations. Companies dedicated to research and technology improvement.
-
Companies dedicated to the operation of piers, dry or floating docks to build, and ship repair and service.
Benefit Summary
|
Raw material import tax exemption, including fuel
|
100%
|
|
Machinery and Equipment import tax exemption
|
100%
|
|
Income tax exemption
|
100% for 8 years, 50% following 4 years (terms extended to 12 & 6 years in less developed zones)
|
|
Repatriated Profit exoneration.
|
100%
|
|
Sales or Added Value Tax exemption
|
100%
|
|
Asset tax exemption
|
100% for 10 years
|
|
Municipal tax exemption and other fees.
|
100% for 10 years
|
|
Local sales limitation (corresponding tax payment)
|
Up to 25% in manufacturing; and 50% for services
|
|
Foreign currency management restriction
|
None
|
|
Local purchase requirements
|
None
|
Source: Free Trade Zone Law
|
