After in Costa Rica the mayor of Alajuela filed an action of unconstitutionality to revert the authentic interpretation approved by the deputies for the payment of real estate taxes applicable to free zones, the Chamber ruled negatively to the legal recourse filed.
The magistrates determined that the allegations presented on March 16, 2021 by Humberto Soto, mayor of the municipality of Alajuela, were incorrect and the appeal was rejected.
After the Mayor of Alajuela filed an action of unconstitutionality in Costa Rica to revert the exoneration of real estate taxes applicable to free trade zones, the business sector believes that legal certainty is being undermined.
On March 16, 2021 Humberto Soto, Mayor of the municipality of Alajuela, filed an action of unconstitutionality. This legal recourse has the objective of reverting the exemption that free zones enjoy for the payment of the real estate tax.
America Free Zone, located in Heredia, Costa Rica, plans to execute an investment plan in the next few years totaling close to $120 million and contemplates the implementation of electro-lane stations and the construction of new infrastructure.
Executives of the business complex informed that up to now they offer their clients 200 thousand m2 of space for business activities, but the medium-term plans are to add another 60 thousand m2.
Requests are being made for confirmation that new taxes to be imposed under the tax reform bill will not affect companies established in free zones in Costa Rica before 2015.
A press release by several business associations and municipalities states:
Business and Guanacaste Municipalities are still seeking clarification on the text of the Tax Reform
An economic coalition has been set up to promote investment and create jobs in the country's old capital of Cartago.
The over-supply of office space in the west of the Costa Rican capital has led to increased growth in the east where it is becoming more and more common to see new real estate developments such as offices and malls.
This backdrop has led the region's main university, in partnership with the chamber of commerce and the administrative board of the regional electricity supplier (Jasec in Spanish), to create the Cartago Special Economic Zone. They hope this will encourage investment.
The XV Latin American Conference on Free Zones will discuss the challenges and opportunities they face, especially from 2015 when the WTO requires the elimination of export tax incentives.
The "XV Latin American Conference on Free Zones" will take place from 26th to 28th October this year at the Hotel Casa Santo Domingo, Antigua Guatemala, Guatemala.
In Costa Rica, pressure from employers to maintain tax exemptions in free zones is increasing.
According to an article in Elfinancierocr.com at a meeting of a group of businessmen which included the main force behind the increase in taxes in the free zones, the former presidential candidate Otton Solis, there were no positive results, and the same outcome was seen at a meeting held with the full bench of the Citizen Action Party, of which Solis is the leader.
The Foreign Trade Promoter has revealed in a study the benefits that free trade zones contribute to the country, including the 58 thousand jobs that pay 60% above the average private sector salary.
From a press release by PROCOMER:
A study by PROCOMER reveals the benefits of free zones in Costa Rica:
- Companies under this regime have become a source of employment for 58,000 Costa Ricans whose wages are 60% higher (1.6 times) than the average national wage in the private sector.
New taxes for businesses in free zones contained in the draft fiscal amendment, are bringing insecurity and threatening the investment climate.
The tax advantages that have made Costa Rica an attractive country for foreign investment could disappear with the approval of a tax package pact agreed between the ruling party and the opposition Citizens Action Party.
The political agreement reached between President Chinchilla and the opposing party Acción Ciudadana (Citizens Action) may ensure the speedy adoption of the tax package.
Elfinancierocr.com published an instructive analysis of the likely impact of the tax plan promoted by the government and currently under consideration in the Costa Rican Legislative Assembly, where it has been give a "fast track" status.
In Costa Rica, the Association of Free Zones and Investment promoter CINDE are lobbying against the imposition of new taxes on businesses.
The proposed measure, now under a fast track approval system in the Legislature, include a tax on dividends for those companies who establish themselves in in the zone after 2015, plus requirement to pay municipal taxes.
The Executive and Ministry of Commerce are clashing over the collection of taxes from 2015 from companies in free zones or industrial parks, included in the tax reform bill.
The new regulations are included in the proposed fiscal reform presented by the government to the Legislative Assembly.
President Laura Chinchilla, was emphatic on the need to approve the fiscal plan in Congress,” ‘so that the country does not go straight into a highly volatile economic situation’.
Modifications to the Costa Rica Free Zone and Active Improvement Regime include 52 procedures that can be performed online.
Among the steps that can be done online is the facility for businesses to apply for entry into the free zone regime, and changing the level of investment as well as the minimum level of employment.
Procomer General Manager, Jorge Sequeira, said the procedure simplifications are aimed at attracting more foreign investment into the country.