Tax Reform and Free Zones

Entrepreneurs in Costa Rica are warning of the negative impact of not maintaining, in the new law of public finances, the VAT exemption on local purchases of goods and services carried out by free zone companies.

Thursday, September 6, 2018

The Association of Free Trade Zone Companies of Costa Rica (Azofras) points out that in the bill to strengthen public finances that is being discussed in the Assembly, motion 302 was not revised, a motion which aims to keep the VAT exemption on the local purchases of goods and services carried out by free zone companies, both to be incorporated into export products and for their operations. Currently the sales tax exemption applies. explains that "...According to Azofras, the approval and enforcement of the proposed wording for this subsection would affect and discourage productive linkages between these companies and national suppliers; In addition, it throws overboard all of the work that has been perfected since 1990 with the issuance of the new Free Zones Law, and it would send a negative message to the international community regarding the country's legal security."

In a statement, the president of Azofras, Jorge Brenes, detailed "...'We compete with 135 countries and 3,500 free zones, which is why instead of attacking the Regime, we must think about taking care of it and strengthening it in order to build loyalty to the companies that are already here, and attract other companies that continue to generate more quality jobs and productive chains," said Jorge Brenes, president of Azofras."

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