FAQ

Macroeconomic Statistics

1. How much FDI receives Costa Rica annually? How is it distributed?

Last year, Costa Rica received US$1.4 billion in FDI. According to the Costa Rican Central Bank, FDI inflows are expected to reach $1.66 billion. Historically, the United States is the country that generates the most FDI inflows.

2. What is Costa Rica´s annual GDP growth rate?

During the past 5 years, Costa Rica’s average annual GDP growth rate has been of 5.5%. Last year, the GDP grew at a real rate of 8.2%.

3. What was the inflation rate last year?

Inflation rate in 2006 was 9.4%, and the projected one for 2007 is 8%.

4. Which are Costa Rica ’s main exports?

Source: PROCOMER.

5. How is the inflation rate affecting salary increase?

Salaries are adjusted every six months in order to maintain the purchasing power; hence salaries grow in accordance to inflation.

Demographics

1. What is Costa Rica’s total population?

Costa Rica’s Statistics and Census Institute, INEC, estimated a total population of 4,299,234 by 2006, of which 50.74 % are men and 49.26 % are women.

2. What is the size of its labor force?

              As of 2005, total labor force was 1,903,068. Men make up 64% of it, and women the remaining 36%.

3. Where is the labor force growth coming from?

Labor force growth responds to several demographic phenomena. Although total births remain an obvious reason for the increase, migration has become important. There are also trends that show that groups formerly considered marginal, tend to enter the labor force every year. The groups include housekeepers and college students who search for job opportunities while they finish their career.

4. What is the unemployment rate?

In 2006, the rate was 6 %. It has remained at similar levels for the past 10 years.

Education

1. How many people graduate from technical high schools, colleges and universities annually?

From 1991 to 2006, 55,200 students obtained a degree from a technical high school. From 1995 to 2006, both public and private universities granted 272,855 diplomas. On average, 26,800 students graduate every year from universities.

Labor costs and regulations

1. Which labor regulations are applied in Costa Rica?

The Day Shift is of 8 hours per day (extendable to 10), 48 hours a week and can take place between 5:00 am till 7:00 pm. Several exceptions may and do apply.

As of holidays, there are nine official holidays. No matter if the companies pay their employees weekly, biweekly or monthly, all obligatory holidays must be paid. Regarding vacations, the worker is entitled to a minimum of two weeks of paid vacations for every 50 weeks of continuous activity under the same employer.

Some other important regulations include the Social Security Coverage. This is partly paid by the employer (26% of salaries) and 9% of salaries received on the part of employees. Another important mandatory benefit is the Christmas bonus (“aguinaldo”), which is an additional one-month salary that must be paid to all employees after one year of employment.

2. What is the average cost of labor force?

The following chart presents different positions that may provide a general idea regarding cost of the labor force.

Source: Consulting Companies. Surveys for the First Semester 2007

Immigration issues

1. I would like a general manager from my country to help start the operation, meaning he will have to live there with his family for 2 years. What kind of permit does he need? And what kind of permits will his family members need?

In order to reside in the country for a couple of years, the general manager will have to apply for a temporary residency permit. As part of the application, there is an option to include family members or “dependents”, so that they will be able to reside in the country with a legal status.

2. What are the requirements for a residency permit?

Some of the requirements include: personal information such as name, address, age and passport number, profession, police record, photocopies of the passport, information and contract of the employee’s company.

3. What are the requirements for a multiple visa?

The request must contain the following requirements: birth certificate, application form, police record, photocopies of the passport, bank statements, property certificates, or any other document demonstrating economic resources, and documents providing contractual working relation between the applicant and a company or family.

4. In order to obtain any permit, may I apply when I am already in Costa Rica or must I do it from abroad?

Depending on your nationality and kind of permit you would like to request, you might have to apply for it from abroad. For consular and restricted visas, you MUST apply from abroad. Nonetheless, if you hold a valid US or European Union visa or residency permit, you WILL NOT need a consular visa and you may stay in the country for up to 30 days. If you need a restricted visa and you hold a valid US or European Union visa or residency permit and Costa Rica has diplomatic relations with the country, you WILL NOT need a visa permit to enter the country and your stay may not exceed a 30-day period.

Taxes and Incentives

1. What are the taxes and duties applicable to our business? Are there any incentives?

• Income tax (10% to 30%)
• Tax on capital (annually based on net capital or equity)
• Property tax (0.25% of the appraised value of the property)
• Sales tax (13%)

Incentives from the Free Trade Zone Regime provide 100% exemption on:

• Import duties for raw materials, equipment and components
• Corporate income tax
• Export taxes, local sales tax, excise taxes, etc.
• Remittances repatriation tax

2. Am I obliged to pay duties in the US?

No. Currently, Costa Rica has duty free access to the US through the Caribbean Basin Initiative (CBI). The          Central American Free Trade Agreement-Dominican Republic (CAFTA-DR) will maintain and broaden these guarantees. Costa Rica also enjoys MFN (Most Favor Nation) and GSP (Generalized System of Preferences) access to the US of a wide range of products.

3. Must I have a local partner?

No. Foreigners have no limits of property handling and they can conduct business activities freely. Foreigners have constitutional equality of rights and obligations.

Infrastructure

1. What is the average electricity rate?

US$0.07-$0.12 per KWh

2. Which ICT’s are available in Costa Rica? What are their costs?

 

3. My phone does not work in Costa Rica, what should I do?

Mobile customers visiting Costa Rica and attempting to do roaming must make a prior contact with their cellular provider at home in order to obtain roaming service information and its activation. To access customer care from ICE, dial 611 or 193.

Others

1. Do I need to drink bottled water in Costa Rica?

According to the National Laboratory of Water, 82.2% of the population has access to drinkable water. Hence, you are not obliged to drink bottled water, and you can drink tap water.

2. What is the time zone? Is there daylight savings time?

Costa Rica is in the Central Standard Time zone. There is no daylight savings time since we do not experience a harsh season changes.

3. Which airlines fly into Costa Rica?

American Airlines, America West, Aviateca, Air Canada, Continental, Condor, Delta, Iberia, Taca, Martinair, Cubana, Copa, Mexicana, United, and US Airways.