Costa Rica: Update on tax incentives for investment outside greater metropolitan area
Additional tax incentives intended to attract investments in free trade zones
Additional tax incentives intended to attract investments in free trade zones
Legislation to amend the free trade zone system in Costa Rica provides additional tax incentives intended to attract investments to locations outside the “greater metropolitan area.” Read TaxNewsFlash
Following congressional approval, implementing regulations will need to be issued within six months of enactment.
Requirements
Under the measures, new categories of companies will be eligible for the tax incentives. Other provisions will expedite the process for starting eligible companies.
- In general, eligible companies will be required to make a new investment corresponding to U.S. $5 million and will need to operate within a free trade zone industrial park.
- Companies located outside a free trade zone industrial park will be required to make a new investment of U.S. $10 million.
- If the company is a human health service center company (one that provides services of high-resolution hospital entities), the minimum investment is U.S. $140 million.
- If the investment is in sustainable adventure parks, the minimum investment is U.S. $5 million in fixed assets.
The investment needs to be made pursuant to an investment plan of eight years. Also, there is a requirement for a minimum of 100 permanent employees who are registered and reported to the Costa Rican social security system (50 permanent employees if a sustainable adventure park).
There are other requirements concerning sales made to manufacturing companies under the free zone regime.
Tax incentives
Companies that satisfy the investment requirements are eligible for certain tax exemptions such as:
- Full exemption regarding the imports of goods necessary for operations
- Full exemption regarding the importation of vehicles for non-personal use
- Full value added tax (VAT) exemption regarding local purchases of goods or services necessary for operations
- Full exemption regarding taxation of remittances made abroad
Other tax incentives include a 10-year exemption regarding the real estate transfer tax, municipal business license tax.
Lastly, there are special measures relating to the corporate income tax exemption.
Read a May 2022 report [PDF 4.5 MB] prepared by the KPMG member firm in Costa Rica
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