Success of Free Zone Regime in Costa Rica

In the last four years since the reform of the law in 2009, 132 companies registered to operate under this tax exemption scheme.

Tuesday, July 22, 2014

Since 2009 companies eligible under the free zone regime "... must be included in one or more of the categories set out in the law, including: handling, processing, manufacturing, production, repair and maintenance of goods, repacking and redistribution of goods and provision of services for export or re-export. "

Alvaro Valverde, executive director of the Association of Free Zones in Costa Rica (Azofras) assured Crhoy.com that "... this regime has positively impacted the country, not only in terms of the arrival of fresh resources for the country, but also because of the creation of jobs, both directly and indirectly through production linkages. "

For entrepreneurs the regime has allowed the country to remain competitive with other neighboring countries in terms of attracting foreign investment, but there are still problems that impair competitiveness and can not be offset by the benefits of the free zone scheme.

Valverde noted that "... 'There are issues of concern: every three or four months the cost of energy goes up and this increases the cost of production and make us less competitive; It is a very big concern. Road infrastructure is a necessity and, for example, the planned extension of Route 32 and the one in San Carlos and the new terminal in Moin, which is another a project where it is important that it goes ahead'"

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More on this topic

Treasury Casts Eyes on Free Zones

September 2014

Investors are on the alert over possible modification to the Law on Free Zones while analysts are warning that this would generate legal uncertainty.

The government will be revising the law on free zones in order to avoid companies who are not operating under the regime from moving into it and avoiding paying taxes.

Congress for Free Zone Companies in Costa Rica

June 2014

On July 10th, representatives from companies the free zone regime will meet to discuss issues such as investments outside of the greater metropolitan area and production chains.

In addition to the issue of productive chains generated by companies operating under the free zone regime, discussion will take place on other topics such as opening free zones in areas which are less developed and more remote from the greater metropolitan area, where the majority of the sites offering this tax incentive scheme are located .

Costa Rica: Investment in Free Zones Still Falling

April 2014

For third year in a row investment flows from foreign companies in the free trade zone have decreased.

The uncertainty generated related to taxes and the loss of competitiveness of Costa Rica compared with other countries also affects the free zone regime, which in 2013 received foreign direct investment (FDI) of $528 million, 12% less than in 2012, according to figures from the Central Bank of Costa Rica.

Costa Rica: Foreign Investment in Free Zones Drops 21%

April 2013

The causes that have been cited are the gap between supply and demand for skills, electricity tariffs, infrastructure problems, and increased competition among countries for FDI.

During 2012, the sector received $535 million whereas the previous year it received $679 million, reporting a drop of 21%.

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