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Investing in Costa Rica- The Free Trade Zone Advantage

Los Sueños Resort Costa Rica

What you need to know about investing and free trade zones in Costa Rica

Those considering buying in a home in Los Sueños Resort, or nearby, may also be considering investing in Costa Rica by building a new business.

Under Costa Rican law, foreign and domestic companies making new investments, creating jobs and expanding exports in specially designated free trade zones, zonas francas or FTZs, are exempt from certain taxes, depending on the nature of the business and specific government requirements. If you’re considering investment options, thoroughly research free zones in Costa Rica. Depending on the municipality and the business sector, there are additional requirements in effect. That said, Costa Rica’s economic resurgence is tied directly to foreign investment in free zones, particularly from the U.S.

Costa Rica actively pursues foreign direct investment (FDI), led by the Foreign Trade Promotion Corporation (PROCOMER) and the Costa Rican Investment and Development Board (CINDE), supported by tax exemptions: import duties, a zero percent income tax rate, and a zero percent tax rate on dividends. Most recently, CINDE’s focus is on creating clusters of related businesses, such as “medical devices,” “services” and “advanced manufacturing.”

Some 256 companies conduct business operations in Costa Rica’s FTZs, including Puntarenas, where Los Sueños Resort is located, as well as various other locations around the country. In addition, they benefit from simplified investment, trade, and customs procedures, with the potential for the other benefits depending on locality and specific company circumstances. Benefits can include employee training and employee recruitment assistance.

Minimum investment levels are modest and restrictions on outsourcing limited, as they are on raw materials, parts, components and packaging, as long as the ultimate product or service is exported. The exemptions vary depending on whether the zone is inside of or outside of the designated greater metro area. Reinvestment at the end of the original term is possibly, depending on the percentage of the original investment, for a limited time.

Costa Rica does not impose requirements on foreign investors to transfer technology or proprietary business information or purchase a certain percentage of inputs from local sources. However, its agencies do focus on investors who are likely to do so.

The Puntarenas Free Trade Zone just outside the Port of Caldera, the main Pacific port, is a little more than 30 miles from Los Sueños Resort & Marina, and easily reached by car. Comprehensive utility, medical, banking and government services are available, as well as dedicated Internet access. However, it’s important to exercise caution, before taking the investment plunge:

• Confirm the company’s registry and financial record in the economy (e.g., taxes and employees’ Social Security registration)
• Consult an attorney who specializes in Costa Rica’s FDIs and the sector you’re investing in
• Conduct due diligence as with any investment

As they say on the street: “Past performance does not guarantee future success.” Do your homework.